Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

ROSS AND CROMARTY (COASTAL WATERS POLLUTION) ORDER

CONFIRMATION

Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Ross and Cromarty (Coastal Waters Pollution): And the same was read the First time; and ordered to be considered upon Wednesday 4 July and to be printed. [Bill 37.]

Oral Answers to Questions — SCOTLAND

Ex-police Sergeant William Jamieson (Royal Prerogative)

Mr. Dalyell: asked the Secretary of State for Scotland what study he has made of the case of ex-police sergeant William Jamieson of Bo'ness; and whether he will consider making a recommendation to the Queen for operation of the Royal Prerogative.

The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): My right hon. Friend is now looking into the case of ex-police sergeant Jamieson. This case has not previously been raised with him in relation to the possible exercise of the Royal Prerogative of Mercy. My right hon. Friend will write to the hon. Member as soon as possible.

Mr. Dalyell: Does that mean that the issue is being kept open?

Mr. Rifkind: That is correct. The issue is being kept open. We shall try to

come to a speedy decision, as is appropriate.

Scottish Development Agency

Mr. Dewar: asked the Secretary of State for Scotland if he will make a statement on the funding of the Scottish Development Agency; and what effect the reduction in its budget will have on the agency's activities and terms of reference.

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): As I told the hon. Member for Glasgow, Maryhill (Mr. Craigen) on 19 June, it is intended to achieve a reduction in the agency's published Supply Estimates for 1979–80 of about £20 million. This will still leave the agency with about 25 per cent. more available to it than it spent last year.

Mr. Dewar: Does the Under-Secretary of State accept that that is almost certainly a cut in real terms, given the high rate of inflation that we can expect from the Conservative Government? Will he accept that it is the worst type of ideological prejudice to restrict the operation of the Scottish Development Agency at a time when we can expect cataclysmic unemployment as a result of the Government's policies? Will the Minister please undertake to guarantee that there will be no cut in the type of investment that the agency can make or in the range of its interests, even if he is being mean about the money?

Mr. Fletcher: There is no question of the Government being mean about money for the SDA. It was seriously over-funded. The provisions that are being made for the future of the SDA will be in no way restrictive. They will help to make it more efficient and effective in its future operations.

Mr. Gordon Wilson: If the Minister feels that the SDA is over-funded, why did he not transfer that over-funding to help Scottish shipyards or, indeed, to maintain its interest scheme for the construction of oil rigs in order to maintain employment in Scotland? Is the hon. Gentleman really satisfied with the co-ordination of economic policy as it affects Scotland? How are his policies likely to create employment in Scotland?

Mr. Fletcher: The most important need of the Scottish shipbuilding industry is


orders for ships. It is not a matter of funding the SDA or anything else.

Mr. Lang: Does my hon. Friend agree that, useful though the SDA is, like its predecessor, the most important role that the Government can play in creating new jobs in Scotland is to encourage incentives amongst individual men and women? Will he reaffirm the commitment to give all the help that he can to small businesses?

Mr. Fletcher: Yes. We are committed fully to giving help to small businesses. In that respect we believe that the SDA has a useful role to play.

Mr. Mlillan: Since all the SDA's activities—whether industrial development, factory building or clearing derelection—are connected with the provision of jobs, is it not inevitable that a cut of £ 20 million in the planned budget for next year will result in the loss of thousands of jobs in Scotland?

Mr. Fletcher: That is a gross exaggeration. I am surprised that the right hon. Gentleman should make it. He must know better than anybody the extent to which his Government over-funded the SDA's operations. The SDA will still have 25 per cent. more funds available to it this year than it had last year, despite the cuts.

Hill Livestock Compensatory Allowances

Mr. Myles: asked the Secretary of State for Scotland if he will make a statement on the level of hill livestock compensatory allowances for 1980.

The Secretary of State for Scotland (Mr. George Younger): My right hon. Friends and I will review the level of hill livestock compensatory allowances for 1980 towards the end of the year when we know the outcome of the autumn store stock sales and have up-to-date information on changes in production costs.

Mr. Myles: Does my right hon. Friend agree that it is vital that primary producers of calves in the hill areas have their confidence restored so that we may be in a stronger position when the predicted shortage of beef occurs?

Mr. Younger: I agree very much with my hon. Friend, and we shall take these matters very carefully into account in the review we will be making this autumn.

Mr. Russell Johnston: Is the Secretary of State aware that that is a very disappointing answer and that the agriculture industry is expecting some increase now to take account of increased fuel costs and rising inflation? Is he aware also that Conservative candidates in the election campaign gave the impression that action would be taken speedily if the Conservative Party came to power? Is it the right hon. Gentleman's intention to pay up to the EEC limits in future?

Mr. Younger: The question is directed to the levels for 1980, and I have answered it in that sense. In relation to the present situation we hope to announce a decision very shortly.

Mr. Pollock: Does my right hon. Friend agree that what farmers require, above all, is a clear and strong commitment by the Government to supporting a home-based food industry? Does he agree further that his colleagues at the Ministry of Agriculture, Fisheries and Food are to be congratulated on the successful negotiations in Europe which will be of real help to consumers and farmers alike?

Mr. Younger: My hon. Friend is absolutely right. There is no doubt that the success of my right hon. Friend the Minister of Agriculture, Fisheries and Food in his negotiations in Europe last month was an extremely good boost in confidence for the farming industry. Scotland is no exception to that.

Fishing

Mr. Sproat: asked the Secretary of State for Scotland when he plans next to meet representatives of the fishing industry.

Mr. Younger: I met representatives of the United Kingdom fishing industry both at home and in Luxembourg at the time of the Council of Fisheries Ministers on Monday 25 June 1979. I am arranging meetings at an early date with representatives of the industry in Scotland.

Mr. Sproat: When my right hon. Friend meets those representatives, will he, in the light of the tragic loss of the


"Carinthia" last week and the 22 fishermen from the North-East who have died at sea in the last 12 months, seek to persuade them, in conjunction with his right hon. Friend at the Department of Trade, to make far more use of the new radio open line for reporting in? Can he tell the House what consideration he is giving to compulsory survival training for fishermen?

Mr. Younger: I agree with my hon. Friend that the number of tragedies in the fishing industry should cause us great concern. I shall be discussing these matters with representatives of the fishing industry at the earliest possible opportunity.

Mr. Grimond: What will the Secretary of State be able to say about herring when he next meets the fishermen? Does he agree that there is evidence of an increase in the number of herring in the North Sea? Can he say what he is currently telling fishermen about whiting quotas?

Mr. Younger: We are convinced that it is necessary to continue the herring fishing prohibitions in 1979, because we must allow for the recovery of depleted stocks. Naturally we regret the hardship which closures of this kind can cause, both to catchers and processors, but we cannot ignore the compelling scientific evidence that demonstrates the need for continued protection of herring in our waters. As for whiting, that is a matter we shall also discuss with the industry.

Mr. Donald Stewart: Will the right hon. Gentleman, in conjunction with his right hon. Friend the Minister of Agriculture, Fisheries and Food, be prepared to give a sympathetic reply to the request from the Western Isles fleet for a fixed quota of herring caught by drift net for the local market on the lines of a similar dispensation given to the Dutch?

Mr. Younger: This is a wider question, but I shall consider that suggestion before meeting representatives of the industry.

Mr. Henderson: In his discussions with the fishing industry, will my right hon. Friend include talks with the Fife Shell Fishermen's Association about the disastrous state of the crab market which has resulted in hundreds of boxes of crab

bodies being thown overboard each week? Will he take steps to prevent the dumping on the market of cooked crab meat from outside the EEC?

Mr. Younger: This problem is causing great concern in some quarters of the fishing industry. I cannot say that we have a reasonable and readily identifiable solution to it, but it is a matter that we shall discuss.

Mr. Robert Hughes: When will the right hon. Gentleman be able to announce a decision about funding for the development of the fish market in Aberdeen? Is he aware that there is concern in the city following the meeting of his right hon. Friend Lord Mansfield with the Aberdeen harbour board, when he gave its members a very dismal view of the funding that might be provided by his Department?

Mr. Younger: I do not know about the last part of that question, but the case which was put by the Aberdeen owners for consideration for parity with the English ports is very much under consideration by my Department.

Civil Servants (Dispersal)

Mr. Gregor MacKenzie: asked the Secretary of State for Scotland what assessment he has made of the employment consequences to Scotland of the dispersal of Civil Service jobs from the Ministry of Defence and the Overseas Development Administration to Glasgow and surrounding districts.

Mr. Younger: This depends on assumptions about local recruitment and the multiplier effect, but the regional implications and the importance of job structure will be taken fully into account in the current review of the dispersal programme.

Mr. MacKenzie: Is the Secretary of State aware that many right hon. and hon. Members on both sides of the House are very concerned to hear that there will be a review at all, in view of the specific assurances given by his predecessor and by him at the Dispatch Box only a month ago that the full dispersal would go ahead? May we now have from the right hon. Gentleman an assurance that there will be no diminution of the numbers going to Glasgow


and East Kilbride? Will he tell the House how much has already been expended by the SDA, and local authorities, in preparing for these people coming to Glasgow?

Mr. Younger: I should have thought that the right hon. Gentleman would have been a little chary of expressing such extreme remarks and would have regarded a review as an extremely reasonable exercise to undertake, particularly in view of the extreme dilatoriness of the previous Government over this question. I understand from the Property Services Agency that it has spent £3·45 million on the acquisition of sites at St. Enoch's and Anderston for the dispersal proposed there.

Mr. Galbraith: Will my right hon. Friend please contradict the rumours, now prevalent, that the Ministry of Defence is not to move to Glasgow? Will he confirm that this vital aspect of decentralisation and devolution is to be carried out as soon as possible, as I asked him to confirm in our recent debate on the Scotland Act—which I do not think was mentioned in his reply? I have also written to him and have not had a reply.

Mr. Younger: I am grateful to my hon. Friend for his interest. I have made clear that no decisions on this matter have been taken. All these factors, and the concern expressed by my hon. Friend and others, will be taken into account in the course of the review, but no decisions have yet been taken.

Mr. Cook: If the Secretary of State is unable to persuade his colleagues in Parliament to disperse Civil Service jobs to Scotland, will he at least resist their demands that he slash the number of Civil Service jobs already in Scotland? Will he not at least recognise that his statement on Saturday that the Scottish Office was a great success—a success of which the people who worked in it should be proud—must have been greeted with a hollow laugh by most of his staff, bearing in mind the commitment to cut out one in eight posts in the Scottish Office?

Mr. Younger: There is no such commitment. What I have been discussing with my staff is the necessity, which all Government Departments must recognise, in view of the parlous state of the

economy of this country as it was left by the previous Government, to reduce our expenditure on necessary services to a level we can afford. If the hon. Gentleman does not like it, he should have persuaded the previous Government to do something about it.

Mr. Allan Stewart: Does my right hon. Friend agree that one of the problems about dispersal has been the unfavourable image projected of Glasgow and the surrounding area? Will he impress upon those concerned the excellent amenities and the very high quality of life available in many parts of West Central Scotland including, of course, East Renfrewshire?

Mr. Younger: I agree with my hon. Friend that the best answer to the so-called unfavourable image is the extreme success of the Post Office savings bank which has been successfully established in Glasgow. People there enjoy it very much.

Mr. Harry Ewing: Will the Secretary of State accept that the kind of wriggling replies that he has given this afternoon are liable to do him an injury? Will he also accept that if Glasgow and West Scotland do not get these 6,000 Civil Service jobs that will be regarded as a total and complete betrayal of Glasgow and West Scotland?

Mr. Younger: I hope that the hon. Gentleman will not anticipate the results of the review. It is perfectly reasonable, and right, for a new Government to review such matters as these. I hope that he will await the outcome of the review.

Road Development (Glasgow)

Mr. Galbraith: asked the Secretary of State for Scotland to what extent he is involved in the development of roads in the city of Glasgow.

Mr. Rifkind: My right hon. Friend makes each year an overall allocation of capital resources to Strathclyde regional council for the provision and improvement of public transport and roads within the region. Within that allocation the regional council decides which road schemes it wishes to proceed.

Mr. Galbraith: As a road, by its very nature, affects a wide area and is therefore of more than local interest, and


when so much taxpayers' money is involved, should not the Secretary of State take a greater interest, and will my hon. Friend agree that some road proposals, such as that for a road to go through Glasgow Green—

Mr. William Hamilton: Reading.

Mr. Galbraith: I do not know what the hon. Gentleman is talking about—the road proposed to go through Glasgow Green, the Crow Road expressway in my constituency, and, formerly, the Great Western Road project;—

Mr. William Hamilton: Reading all the time.

Mr. Galbraith: Will you please shut up?

Mr. Speaker: Order. No one could have been quieter than I was. Will the hon. Gentleman come to a conclusion?

Mr. Galbraith: I am trying to do just that, Mr. Speaker, and if hon. Members opposite did not interrupt so much I might be able to get to the point, which is that the roads which I have mentioned—the proposed road across Glasgow Green, the Crow Road expressway, and formerly the Great Western Road scheme—involve issues of aesthetic and environmental interest and financial—

Mr. Speaker: Order. The hon. Gentleman is not being fair to the rest of the House. It was not just that he was interrupted. It was a very long supplementary question.

Mr. Rifkind: I know that my hon. Friend is voicing a matter which is of interest and concern to some of his constituents. I think that he will be aware that the proposals for the Crow Road expressway in particular have been before the regional council and the local authority since 1965. They were subject to extensive public consultation on the part of the local authority and also involved a public local inquiry into a compulsory purchase order. I am sure that my hon. Friend will agree that on a matter which is essentially local it is right and proper that Strathclyde regional council, which is the relevant authority, should decide its own priorities on the basis of what it believes to be appropriate.

Scottish CBI and STUC

Mr. Allan Stewart: asked the Secretary of State for Scotland when he plans next to meet the Scottish CBI and the STUC.

Mr. Younger: I have already had meetings with both these bodies and shall be meeting them again later this summer.

Mr. Stewart: I am grateful to my right hon. Friend for that information. In his future discussions with both sides of Scottish industry, will my right hon. Friend emphasise that some recent news from Clydeside, notably from John Brown Engineering and Clydework Engineering, shows how industrial success can be achieved in Scotland if the key problem of improving productivity is tackled successfully by joint efforts on the part of management and employees?

Mr. Younger: Yes, I appreciate what my hon. Friend says, and I think it important to bear in mind that, even in the present situation which we have taken over in government, there are still good things as well as bad happening even on Clydeside, and we welcome that very much. As regards higher productivity, the strategy of the Budget is intended to encourage people to have an incentive to attain just that, and I am sure that it is most valuable for the future expansion of business in Scotland.

Mr. David Steel: When the Secretary of State talks with the Scottish CBI and STUC, will he convey from those bodies to his colleagues in the Department of Industry the important fact that development area status in Scotland has been accorded not just on the criterion of levels of unemployment but also on the criterion of levels of depopulation, and that nothing should be done to damage that criterion?

Mr. Younger: I entirely agree that unemployment levels are not the only factor in this context, and all these other matters must be taken into account. They are being taken into account in our review of regional policy.

Mr. Norman Hogg: When the Secretary of State next meets the Scottish Trades Union Congress, will he listen carefully to the alternative economic


strategy being offered by the general council of the STUC and, in particular, to the views of its local government committee, which is expressing great concern about the savage attacks being made on the public sector by his Government?

Mr. Younger: I shall always listen with the greatest interest and care to all that is said to me by the STUC. I can only share the concern which it must feel about the effects on local government of the reductions in public expenditure which we are forced to make. No one can deny that they are extremely difficult to deal with, and the reason for them is that there is simply not enough money left after the depredations of the last Labour Government to pay for the services which we would like to have.

Mr. John Mackay: When my right hon. Friend meets representatives of the STUC, will he urge on them the need to solve the inter-union dispute which is keeping the steel complex at Hunterston closed? Does my right hon. Friend agree that such continued closure does nothing for Scotland's image or for our prosperity?

Mr. Younger: I agree with my hon. Friend. I was present at the opening of the Hunterston complex, and it was extremely sad that an inter-union dispute should have made it impossible to work it on that day. I shall do anything I can to encourage those concerned to come together, but it is primarily a matter for the British Steel Corporation and its employees.

Mr. Millan: How does the Secretary of State propose to justify to the CBI and the STUC when he next meets them the Government's decision to discontinue the scheme of assistance for the offshore industry, which has brought many thousands of jobs to Scotland and whose discontinuance is bound to put many of these jobs at risk?

Mr. Younger: I appreciate the point that the right hon. Gentleman makes. My colleagues in the Department of Energy are closely involved in this matter. As regards discontinuance of the scheme, as the right hon. Gentleman will be only too well aware there is an extreme shortage of money to deal with many problems throughout the country. If he had

thought about this a year or two ago, we might not have been in that position now.

Primary School Teacher Training

Mr. Maxton: asked the Secretary of State for Scotland when he intends to announce his plans for the introduction of a four-year primary education degree for all students undertaking training as primary school teachers in Scottish colleges of education.

Mr. Alexander Fletcher: My right hon. Friend is considering proposals by the General Teaching Council for Scotland for replacing the primary diploma with a four-year degree and will make a statement in due course.

Mr. Maxton: I am glad to hear that the Scottish Office is at least considering the issue, but is the hon. Gentleman not aware that the GTC put forward these proposals several years ago, colleges have already drawn up their proposals and all the teacher unions in Scotland are urging this measure on the Government? Further, is the hon. Gentleman aware that in England and Wales such proposals are well advanced, and if these proposals are not introduced in the near future the Scottish teacher training system, which has been in advance of that in England and Wales throughout this century, will fall behind? Finally, will the hon. Gentleman take it that there will be some disappointment in Scottish education circles about the delay which seems to be indicated by his answer?

Mr. Fletcher: The hon. Gentleman will be aware that the degree course in England and Wales is for three years, as compared with the recommendation for four years in Scotland, and that adoption of the Scottish proposal would mean a considerable increase in public expenditure. My right hon. Friend will make a statement as soon as posible, but I cannot at this point say just when that will be.

Mr. John Mackay: Will my hon. Friend remember that the present three-year course at the colleges of education provides excellent teachers for the primary schools of Scotland, and will he guard against adding on an extra year which may increase the theory content of


these courses to the detriment of the practical ability of the teachers coming from the colleges?

Mr. Fletcher: I am grateful to my hon. Friend for making that valid point. We must continue to look at this matter not only on financial grounds but on educational grounds and make sure that it is necessary in the first place for this step to be made.

Mr. Dempsey: Before making up his mind, will the Minister consider also the strong representations and convincing arguments on this very subject adduced by the Presbytery, which I have communicated to his Department, and will he bear in mind that, irrespective of the number of years which may be involved, if a degree course can be introduced in England and Wales it ought surely to be introduced in Scotland?

Mr. Fletcher: I shall take those representations into account, and I note again the points that the hon. Gentleman makes.

Fuel Supplies

Mr. John Home Robertson: asked the Secretary of State for Scotland if he is satisfied with the state of fuel supplies in rural areas of Scotland, and what steps he proposes to take now and during the coming winter to ensure that essential public services and industries will receive adequate fuel supplies.

Mr. Younger: While I am satisfied that supplies in rural areas are in general adequate, I recognise that there have been distribution problems in specific areas. I am satisfied that the major oil companies are making efforts to achieve an equitable distribution of oil products and are well aware of the need to rebuild stocks for the coming winter. The Government are watching the situation closely and will do all they can to help where serious difficulties arise.

Mr. Home Robertson: Is the right hon. Gentleman aware that the fuel supply problem in many rural areas is being aggravated because the percentage reductions being applied by the various companies, which range from 5 per cent. to 20 per cent., are based on the 1978 figures, which were themselves distorted because there was a price war going on during 1978? Is the Secretary of State

aware also that the position in my constituency is already serious and that many petrol stations are running dry, including some which normally supply ambulances? May we have an assurance that he is prepared, if the need arises, to take urgent and active steps to ensure supplies when demand surges at the time of the harvest and in the coming winter?

Mr. Younger: We shall always do our best to respond to any crisis brought to our attention. In one instance it was brought to our attention that there were difficulties in obtaining supplies of fuel for ambulances, and I believe that that has been resolved satisfactorily. The local supplier is the best person to respond to genuine local difficulties. Where that procedure fails to resolve a serious problem for an essential service, or where there is revealed inequity of treatment by the supplier, I shall always be prepared to help if I can.

Mr. David Steel: Will the right hon. Gentleman try to persuade his colleagues in the Department of Energy that there are serious problems in the Borders area of Scotland that must be considered distinctively? Is he aware that some suppliers are facing cuts in supply of up to 50 per cent? There is now a lay-off of lorry drivers among the small hauliers, which is extremely serious with the late harvest approaching.

Mr. Younger: The problem is complex. It is made more so because different companies have different quotas and different sources of supply. In general, supplies are available in most areas. Where pockets of difficulty arise we can usually do something to iron out the problems. I shall try to do that wherever possible.

Mr. Peter Fraser: I recognise that some petrol companies are indulging in slightly doubtful tactics under the cover of a distribution crisis. However, will my right hon. Friend take this opportunity to reassure would-be visitors from south of the border that Scotland is not a petrol desert north of the Tay, and that there are still real opportunities for them to enjoy their holidays in Scotland this summer?

Mr. Younger: I appreciate what my hon. Friend says. I think that the oil companies are mostly doing their best in what is a difficult situation for them as


well. Some tourists have been having difficulty, but in general none of them need fear that if they come to Scotland on holiday they are likely to be left completely dry of petrol. I understand that the Scottish Tourist Board will soon be mounting a campaign to try to counter that idea.

Mr. Gordon Wilson: As Scotland will be exporting 55 million tonnes of oil this year, how can the Government justify any fuel shortage?

Mr. Younger: Scotland will be importing a good deal of gas from other parts of the United Kingdom. The hon. Gentleman should realise that it is an international market and that the United Kingdom is currently extremely well placed. We are in a much better position than most of our neighbours, provided that everybody exercises common sense in a difficult situation.

Mr. George Robertson: On 11 June, the Secretary of State for Energy assured his hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie) that he was taking immediate steps to deal with the crisis in rural areas and that these steps would be effective. As it is clear that there are still widespread problems throughout Scotland, how can the right hon. Gentleman sustain the myth and the fiction that a free market in petrol will solve the problems of the rural areas? How can he say that tourists will have no problems in finding petrol supplies this summer?

Mr. Younger: First, I welcome the hon. Gentleman to his new responsibilities, upon which I congratulates him. Secondly, I cannot agree with him if he suggests that there is a widespread and wholesale impossibility of obtaining petrol throughout Scotland. That is not so, and I hope that those who are thinking of coming to Scotland will not take that view. There are bound to be difficulties. Nobody can pretend that everything will be plain sailing. If there are special difficulties in certain areas, the Scottish Office will always be willing to try to help. We have been able to provide help so far whenever a request has been made.

Public Authority Housing (Security of Tenure)

Mr. Adams: asked the Secretary of State for Scotland what action he intends to take to ensure security of tenure for persons resident in public authority houses in Scotland.

Mr. Rifkind: My right hon. Friend is considering whether security of tenure provisions should be included in the Government's proposed housing legislation.

Mr. Adams: Is the hon. Gentleman aware that the law in Scotland treats the tenants of local authority houses as second-class citizens, and that a local authority may proceed within the sheriff court to obtain an eviction order against a tenant without offering any reasonable proof to substantiate its action? Does he agree that the cornerstone of any such legislation should be to place a burden of proof on the local authority when it proceeds for the repossession of its property?

Mr. Rifkind: The hon. Gentleman has correctly stated the legal position. It is only fair to point out that in the majority of cases local authorities do not resort to eviction unless there are reasons which I think Members on both sides of the House would accept would justify that action. Many local authorities are severely criticised for not taking such action when many local residents believe that eviction would be appropriate. I take the hon. Gentleman's argument. The Government are considering the matter. He will be aware that local authorities have considerable feelings on the issue, and we are interested to receive their comments on the consultative paper that was put before them some time ago.

Mr. Ancram: Will my hon. Friend bear in mind the real hardship and misery caused to many respectable and law-abiding council house tenants by the behaviour of their anti-social neighbours? Will he assure the House that he will do nothing to make it more difficult for local housing authorities to deal with the problem effectively?

Mr. Rifkind: My hon. Friend is correct to try to achieve a balance between the legitimate interests of the local authority and those of the tenant. We must


take into account the real fears of many good tenants about the difficulties that they will have in resolving problems with anti-social tenants with whom they live. There is a need to achieve a balance, and that is what we are trying to achieve.

Mr. O'Neill: Is the hon. Gentleman aware that there are many within the public sector of housing because of their employment? Individuals who have been employees of the Falkirk district health board are being forced on to the streets because they have finished their period of employment. Does he accept that security of tenure should apply to retired hospital workers? At present there are many vacant houses in the possession of district health boards that could be provided for retired workers who are now being forced to join housing queues at a time when they are going through the trauma of retirement.

Mr. Rifkind: The hon. Gentleman must accept that tied housing, which is the subject to which he is referring, produces a considerable number of different issues. It is difficult to provide security of tenure when an employee ceases the employment on the basis of which he was provided with a house. It is for the local authority, the body responsible for providing housing for those who need it, to respond to that type of need.

Ardler High School (Dundee)

Mr. Ernie Ross: asked the Secretary of State for Scotland if he will give £3·5 million to Tayside regional council to build a new Ardler high school in Dundee.

Mr. Alexander Fletcher: The hon. Gentleman will know from our recent correspondence that the regional council has decided to withdraw this proposed new school temporarily from its financial plan while various options for future school provision are considered.

Mr. Ross: Is the hon. Gentleman satisfied that the Tory-controlled Tayside regional council deliberately underspent its capital education expenditure allowances for the past three years up to March 1979 by £1,584,000, half the amount that it would take to build Ardler high school? That is in a region where £57,000 has been removed from the financial plan for 1979, a sum which should have been

used for the initial design work for Ardler high school.

Mr. Fletcher: Is the hon. Gentleman aware—

Mr. Cryer: Is the Minister asking a question of my hon. Friend the Member for Dundee, West (Mr. Ross)?

Mr. Fletcher: Yes; I am asking whether the hon. Gentleman is aware that the cuts to which he refers were requested by the previous Labour Government and the previous Secretary of State for Scotland.

Mr. Peter Fraser: Does my hon. Friend recognise that the education authority of the Tayside region is facing a real problem and that there are already considerable priorities, such as Arbroath high school and other schools in Perthshire, to which it has to give its urgent attention?

Mr. Fletcher: We shall consider carefully any proposals that the regional council makes to us.

Mr. Harry Ewing: Is the hon. Gentleman aware that he has grossly misled the House? What he has said is totally without foundation. My hon. Friend the Member for Dundee, West (Mr. Ross) said that there had been an underspend and not a cut in public expenditure. I ask the Minister to withdraw his statement.

Mr. Fletcher: Such underspends might arise for various reasons and as a result of various actions. I do not think that the hon. Gentleman can deny that his Government introduced drastic cuts in expenditure, including local government expenditure.

Mr. Ewing: rose—

Mr. Speaker: Mr. John Mackay.

Mr. Ewing: On a point of order, Mr. Speaker.

Mr. Speaker: I shall take points of order after Question Time.

Later—

Mr. Ewing: On a point of order, Mr. Speaker. During an answer to my hon. Friend the Member for Dundee, West (Mr. Ross) on question No. 11 the Under-Secretary of State for Scotland—the hon.


Member for Edinburgh, North (Mr. Fletcher)—advised my hon. Friend that the reason that the Ardler high school in Dundee had been withdrawn from the building programme was not that the Tayside regional council had underspent, in a period of three years, about £1 million of its education budget, but cuts in public expenditure imposed by my right hon. Friend the former Secretary of State and those of us who were in the previous Government. I challenged the Minister at the time and advised him that he had misled the House and that he ought to withdraw his statement. He declined to do so.
I put it to you, Mr. Speaker, and, through you, to the Minister, that, in view of the reply that the Minister gave to my hon. Friend yesterday, 3 July, giving all the details that I have indicated, he should now withdraw the statement that this was due to cuts in public expenditure.

Mr. Speaker: Order. The hon. Gentleman has been a Member of the House for a long time. [An HON. MEMBER: "Hear, hear. Too long."] Order. It is official. None of us has been here "too long", or I should be getting anxious. The hon. Gentleman knows that he cannot address a question to the Minister through me on a point of order.

English School Examinations

Mr. John Mackay: asked the Secretary of State for Scotland what is his policy regarding the increasing use of English CSE mode 3 examinations in Scottish schools.

Mr. Alexander Fletcher: The use of these examinations in Scotland is a matter for individual education authorities.

Mr. Mackay: Does my hon. Friend realise that the increasing use of the CSE mode 3 shows that there is a demand in Scottish schools for an examination below the level of the CSE O-level? Although he may not wish to go as far as the Dunning committee recommends, will he consider asking the Scottish certificate of education examination board to consider introducing an examination below O-level grade in certain specified subjects such as English and arithmetic?

Mr. Fletcher: I appreciate my hon. Friend's argument. I am sure that he will agree that until decisions have been

made on the Munn and Dunning reports it will be difficult to take the matter any further. I agree that a considerable delay has taken place since the reports were commissioned in January 1975. My right hon. Friend will make a statement on the matter as soon as possible.

Rents (Cumbernauld and Kilsyth)

Mr. Canavan: asked the Secretary of State for Scotland whether he will make a statement about his decision to oppose the limitation of rents in the Cumbernauld and Kilsyth district.

Mr. Rifkind: The rent limitation order made by the previous Administration had the effect of limiting the increase in rents in Cumbernauld and Kilsyth district to £59 in the current financial year compared with the £71 which the district council proposed. My right hon. Friend took the view that there were no good grounds for interfering in this way with the district council's discretion and therefore exercised the powers given to him by section 2 of the Housing Rents and Subsidies (Scotland) Act 1975 to revoke the order. The revocation order was laid before this House on 20 June.

Mr. Canavan: Will the Minister, who is one of the less reactionary members of this Government, come with me to my constituency and explain to the people of Kilsyth, Queenzieburn, Kelvinhead and Banton why the Tory Government are collaborating with the local SNP dictator, Provost Murray, who wants to impose a savage 40 per cent. rent increase? Is not the Minister ashamed to be a member of a Government who refuse to intervene to reduce prices yet intervene to increase rents?

Mr. Rifkind: I thank the hon. Gentleman for the compliment with which he preceded his supplementary question. I am not sure whether it was meant to do me good or harm. Presumably he is aware of that. The hon. Gentleman is always noted for his moderate language. He should be aware that even if the district council—it will be its decision—chooses to impose this full rent increase, the average rent in Kilsyth and Cumbernauld district will become the average rent in Scotland.

Mr. Norman Hogg: Does the hon. Gentleman accept that by reversing the previous Government's decision to limit


swingeing increases in rents proposed by the SNP-dominated Cumbernauld and Kilsyth district council he is permitting the council to attack the living standards of council house tenants? Is he aware that the actions of this council, aided by the hon. Gentleman, have resulted in the erroneous comparison being made between houses built in Cumbernauld 21 years ago, or less, and houses built up to 50 years ago in Kilsyth and Croy, and that such a comparison has no validity?

Mr. Rifkind: The hon. Gentleman must accept that it is only right and proper that elected local authorities should decide their rent increases for themselves and be answerable to their own tenants and electorates for the decisions that they make.

Mr. Lang: Does my hon. Friend agree that the best way of limiting the rise in council house rents is by encouraging the sale of council houses, thus reducing the overall burden on housing authorities?

Mr. Rifkind: Scotland has a deplorably low level of home ownership. One important major way in which that level may be increased is by means of the policy to which my hon. Friend referred.

Mr. Millan: If the Minister is so anxious to allow these decisions to be made by local authorities, why do the Government propose to compel local authorities to sell council houses, even against their will?

Mr. Rifkind: This is a question of priorities. The right of a tenant to own the home that he lives in is a far more important right to protect and enhance than the right of the local authority to prevent him from doing so.

Fife Regional Council

Mr. Gourlay: asked the Secretary of State for Scotland by how much the Fife regional council will require to reduce its expenditure programme in the current financial year to meet the Government's requirements.

Mr. Younger: It is for Fife regional council, like other local authorities, to decide how to respond to my request to all local authorities in Scotland to reduce their planned current expenditure at least to the level consistent with the rate support grant settlement for 1979 –80.

Mr. Gourlay: Is the Minister aware that this represents a vicious attack on the living standards of the people of Fife, whatever measures the Fife region is compelled to take as a result of his measures? Bearing in mind that the Fife region already has the lowest rate level in Scotland, does he agree that the Fife ratepayer should not be faced with this reduction? Will the Minister say how Fife's present standards of service in education, youth employment and roads may be maintained in view of the parsimonious attitude of the Government towards local authorities in Fife?

Mr. Younger: There is no doubt that the changes will result in difficulties for local authorities in their spending next year. However, the matter should be kept in perspective. They will still have more to spend after our rate support grant increase has been made than they would have had under the previous Government's rate support grant order. We have reduced the size of the increase that would have occurred. We must all cut back because the previous Government, of which the hon. Gentleman was a supporter, left the Exchequer so empty that there is no money with which to keep these services going.

Mr. Henderson: Does my right hon. Friend accept that the previous Labour Administration were prejudiced against rural areas in rate support grant terms? For a Labour-controlled authority, Fife regional council has been careful of public money. Will he please discuss with the Fife regional council urgent action to deal with the long-put-off problem of maintaining the unadopted roads?

Mr. Younger: It is my duty, and that of my officials, to do all we can to assist local authorities and their officials to make these reductions in the best possible way in the circumstances. It means great difficulties in the maintenance of many services. That is the result of there not being enough money with which to carry on as happened in the past five years.

Timbury Report

Mr. Foulkes: asked the Secretary of State for Scotland why the report on


services for the elderly with mental disorder in Scotland—the Timbury Report—has not been published; and whether he intervened to delay its publication.

The Under-Secretary of State for Scotland (Mr. Russell Fairgrieve): The report on services for the elderly with mental disability in Scotland was published by HMSO on Monday 18 June this year. There has been no intervention to delay publication.

Mr. Foulkes: I am glad that we have reached this question. It justifies the presence of the Under-Secretary of State. Perhaps he might add to his reply by explaining why the Government have departed from their usual procedure, and that of previous Governments, by not issuing this report to the press and the public. Is the report being covered up in view of the scandalous situation that it reveals of services for the elderly with mental disability and the fact that the cuts in public expenditure proposed by the Government are totally at variance with what is proposed in the report—which is greatly increased public expenditure for this group?

Mr. Fairgrieve: The report is now available for anyone who wishes to read it. There was no delay by the Government. I gave permission for the report to be published on 31 May, without commitment. The hon. Gentleman must realise that the implementation of this report would cost a great deal of money.

Mr. Myles: Does my hon. Friend agree that the only way in which we may support and help the services to the mentally handicapped and the elderly is by improving the wealth of the country?

Mr. Fairgrieve: I agree with my hon. Friend. If this country wants the services that European countries now have, we must have the same productivity as they have in Europe.

Royal High School Building

Mr. Knox: asked the Secretary of State for Scotland what are his future plans for the Royal high school building in Edinburgh.

Mr. Rifkind: My right hon. Friend will await the conclusions of the inter-party talks about the government of Scotland before making a decision about

future use of the Royal high school building.

Mr. Knox: How much public money was spent by the Labour Government in preparing this building for the proposed Scottish Assembly, and how much has been spent on it since 3 May?

Mr. Rifkind: About £3·2 million has been spent so far on providing accommodation for this building. Further expenditure will be required to complete contracts entered into before the referendum by the previous Government. The total estimated cost was £3·75 million. However, we hope to achieve a saving on that sum by, for example, the diversion of furniture to other uses.

Mr. Russell Johnston: Have the Government made any contingency plans for alternative use?

Mr. Rifkind: It would be inappropriate to consider alternative uses until the completion of the inter-party talks, in which the hon. Gentleman is involved.

Mr. Allan Stewart: Does my hon. Friend agree that this building might be sold to private enterprise, which could conceivably put it to productive use?

Mr. Rifkind: Any question of the long-term use of the building must await the completion of the talks.

Scottish CBI and STUC

Mr. Douglas: asked the Secretary of State for Scotland if he intends to discuss with the Confederation of British Industry in Scotland and the Scottish Trades Union Congress the Government's economic strategy.

Mr. Younger: I have no doubt that, in the meetings I shall continue to have from time to time with both bodies, the Government's economic policies will be discussed fully.

Mr. Douglas: Does not the Minister agree that if he goes along on that basis there will be an extremely short agenda? However, he might supplement the agenda by deciding as fast as he can to create jobs, especially in Fife, by making a decision on the Braefoot Bay-Moss Morran project. This is the longest running public inquiry on record. Will he put the developers, the local authorities


and the residents out of their misery by announcing today when he intends to make a decision?

Mr. Younger: I should have thought that if I were to discuss with these bodies the Government's economic strategy it would be a very long agenda and hardly a short one—I hope it would be. As for Moss Morran, the hon. Member will not expect me to express an opinion either way, except to assure him that there will be no undue delay on my part in taking into account, in a proper manner, all the representations that are made, and making a decision as quickly as possible.

Mr. Henderson: Does my right hon. Friend accept that a great many people who are concerned with this matter will much appreciate his answer? Many believe that this is not the right place for a development of the kind proposed.

Mr. Younger: I make no pronouncements either for or against this development. All I can say is that I am carefully taking into account all the representations that have been made.

Partick Health Centre

Mr. Carmichael: asked the Secretary of State for Scotland when he expects to announce the start of construction of the Partick health centre; and if he will make a statement.

Mr. Fairgrieve: I am not in a position to say when it will be possible to announce a starting date for this health centre. As the hon. Gentleman is aware, there have been difficulties in securing a suitable site for the development. These remain unresolved, but the health board is continuing its search.

Mr. Carmichael: That was a most disappointing answer. Having newly arrived in his job, will not the hon. Gentleman cut through some of the medical red tape which is preventing a proper site being found for this centre?

Mr. Fairgrieve: The hon. Member must know that the Strathclyde regional council has no longer made this site available and wishes to use it for another purpose. Another health centre is being considered at Baillieston, and the hon. Member also knows that there is the possibility of using part of the Western infirmary.

Oral Answers to Questions — COURTS ADMINISTRATION

Mr. Gordon Wilson: asked the Solicitor-General for Scotland when he next will meet the director of Scottish courts administration.

The Solicitor-General for Scotland (Mr. Nicholas Fairbairn): I shall be happy to meet the director of the Scottish courts administration at any time, but I have no plans at present to meet him. He is in regular contact with my right hon. and learned Friend the Lord Advocate.

Mr. Wilson: When the Solicitor-General for Scotland eventually gets round to meeting the director of Scottish courts administration, will he express to him his worries and dissatisfaction about the slum conditions in certain sheriff courts which adversely affect staff, judges, juries and witnesses attending those courts? Will the hon. and learned Gentleman assure the director that the Government will not cut back on public money which may be needed for the improvement of facilities in those courts?

The Solicitor-General for Scotland: I am extremely concerned that all facilities, where members of the public are affected when giving evidence or helping in the administration of justice, should be of the best. That is a matter for my right hon. Friend the Secretary of State. However, it is important that prudence in expenditure should be combined with the provision of facilities for members of the public who come forward to ensure that justice is done.

Mr. Peter Fraser: Before my hon. and learned Friend meets the director of Scottish courts administration, will he consider whether the present level of prosecutions and those anticipated in the sheriffdom of Tayside central and Fife justify extra expenditure on court buildings within the city of Dundee?

The Solicitor-General for Scotland: There has been great dissatisfaction for a long time about the provision of facilities in Dundee sheriff court and High Court—as it is when the circuit is there. This again is a matter for my right hon. Friend the Secretary of State. Considerable plans are afoot to improve those facilities and I hope that, with economy, we can make sure that the interests of


justice are served and that the public are accommodated.

Mr. Dewar: When the hon. and learned Gentleman meets the director of Scottish courts administration, will he discuss with him the fate of juries in Scottish courts and some way of circumventing the archaic and, indeed, medieval Act of Parliament of 1587, under which juries are placed in a room to reach their decision and are not released or given any sustenance until such time as they reach a decision, whether it takes days or weeks? Will the hon. and learned Gentleman consider repealing that Act?

The Solicitor-General for Scotland: This is an important matter which a recent case highlighted. The late Lord Milligan, in a case in the High Court, said "The law of Scotland prescribes that once a jury retires it cannot eat. Let us rise for a bun". It is a difficulty which has come to light because of the complexity of cases, though happily juries in Scotland do not take as long in reaching their decisions as they do elsewhere. Nevertheless, as a humane matter, we shall look into this with great urgency.

Oral Answers to Questions — CRIMINAL COURTS (INDUSTRIAL DISPUTE)

Mr. Ancram: asked the Solicitor-General for Scotland what are the long-term effects of the recent industrial dispute on the working of the criminal courts in Scotland.

The Solicitor-General for Scotland: The immediate effect of the industrial dispute has been to increase the time taken to dispose of cases of all kinds. In the short term priority has been given to High Court and custody cases. This means that the long-term effects will be felt mostly in summary matters. I hope that by the end of this year at the latest solemn prosecutions will have returned to normal, and that by the middle of next year disposal times of all cases will have been reduced to their level before the strike began. Indeed, I should like to see the time taken to dispose of cases reduced to an even shorter time than it was when the strike took place.

Mr. Ancram: Does the Solicitor-General agree that one of the most serious

consequences of the industrial action as related to the criminal law is the effect that it had on the 110-day rule, which is Scotland's equivalent to habeas corpus? Can he assure the House that the lessons learned from having had to extend that rule this year have ensured that should a similar situation arise in the future it will be kept to a minimum?

The Solicitor-General for Scotland: I trust sincerely that a similar situation will never arise, and that those charged with serving justice will not feel the need for similar action. However, reforms are under consideration which will have an effect on the 110-day rule and will, I hope, reinforce its humanity as one of the most equitable provisions of the law of Scotland.

Oral Answers to Questions — R. W. McCONNACHIE v. DANCKARTS WOODWORKING MACHINERY LIMITED

Mr. Cryer: asked the Solicitor-General for Scotland if he has recently met the chairman of the Health and Safety Commission to discuss the matters raised with his Department by the hon. Member for Keighley arising from the decision in the case of R. W. McConnachie v. Danckarts Woodworking Machinery Ltd.

The Solicitor-General for Scotland: No, Sir.

Mr. Cryer: Does the hon. and learned Gentleman accept that the answer given by his predecessor on 14 March was completely at variance with his own to me? Does he also accept that in this case the prosecution arose because of a visual inspection of the machinery which disclosed that there was no guard on the chain and sprockets? Does he accept that in such circumstances, to run the machinery with the danger of injury occurring would be absurd when a clear visual examination had demonstrated a breach of safety regulations? Does the hon. and learned Gentleman also accept that in the event of running machinery, the occupier, not necessarily the importer, would be in breach of section 14 of the Factories Act 1961, which places an absolute obligation on employers to provide protection of machinery and guards against components? In those circumstances, what will


the hon. and learned Gentleman do? Will he leave it to lawyers to undertake a test, or will he really get down to some serious discussions?

The Solicitor-General for Scotland: The answer to all those questions is "No, Sir". The hon. Gentleman misunderstands the situation completely. I do not know what his close interest is in this case, but he will know that guards were ordered for these machines and that the machines were tested, which is the statutory requirement of the Health and Safety at Work, etc. Act upon which he was advised when he last asked his question. Any person who imports—in this case it was imported machinery—has a duty to carry out or arrange for the carrying out of testing and examination as may be necessary for the performance of the duty imposed. If the hon. Gentleman really wants unsafe machinery to come into this country, he can arrange for a statutory provision which prevents its being tested before use.

Mr. Cryer: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

Oral Answers to Questions — EX-POLICE SERGEANT WILLIAM JAMIESON (STATED CASE PROCEDURE)

Mr. Dalyell: asked the Solicitor-General for Scotland whether, in the

light of the 70-minute interview which his noble and learned Friend gave to the hon. Member for West Lothian and ex-police sergeant William Jamieson of Bo'ness on Friday 25 May 1978, he has any proposals for reform of the stated case procedure.

The Solicitor-General for Scotland: The Thomson committee made recommendations on reform of the stated case procedure in its third report. As the hon. Member is aware, it is the intention of my right hon. Friend the Secretary of State for Scotland to introduce major criminal justice legislation later in this Session, and reform of summary appeal procedure is high on the list of possible subjects for inclusion.

Mr. Dalyell: Should not amendments and the reasons for their rejection, at least be known in written form to any court of appeal?

The Solicitor-General for Scotland: As the hon. Gentleman will be aware, that was and is, I think, the only suggested reform capable of ensuring that this difficulty could be averted. Accordingly, it is my hope that in the criminal justice legislation the revised appeal procedure will ensure that if a sheriff rejects any amendments proposed by those who have asked for a stated case—namely, the appellant—they will form part of the stated case, as will the reasons for their rejection. Thus the appeal court will be able to adjudicate and make what I hope will be a fairer appeal system.

Orders of the Day — FINANCE BILL

Considered in Committee. [Progress 3 July.]

[Mr. Bernard Weatherill in the Chair]

Clause 1

INCREASE OF VALUE ADDED TAX

Amendment No. 20 proposed [3 July], in page 2, line 27, at end add:
'(6) As from the passing of this Act subsection (1) above shall not apply to any work of repair or maintenance of a building'.—[Mr. Horam.]

Question again proposed, That the amendment be made.

3.31 p.m.

Mr. Geoffrey Johnson Smith: On a point of order, Mr. Weatherill.

The Chairman: Before I call the hon. Member—I may be anticipating his point of order—perhaps I may tell the Committee that with this amendment are grouped the following:
Amendment No. 36, in page 1, line 21, at end insert—
'Provided that after the passing of this Act these changes shall not apply to insulating materials and other products which can be shown to conserve energy.'.
Amendment No. 37, in page 2, line 27, at end add—
'(6) As from the passing of this Act subsection (1) above shall not apply to any repairs to buildings listed as of historic and architectural importance.'.
Amendment No. 36, which stood earlier on the Notice Paper, is no longer shown on today's amendment sheet, but it will be in order in this debate to refer to value added tax on insulating materials and other energy-conserving products.

Mr. Johnson Smith: I am most obliged to you, Mr. Weatherill, for anticipating my thoughts with your usual perspicacity.
Amendment No. 36 stands in my name. Last night we heard from the Opposition spokesman on these matters, the hon.

Member for Gateshead, West (Mr. Horam). We did not have the happiest of passages. The hon. Gentleman was his usual agreeable self, but the hour was very late and he addressed us at some length. We understood the reasons for that. He told us that materials purchased for the purposes of repair and maintenance, whether purchased by an individual or supplied by a contractor, attracted VAT, without any possibility of a rebate. From such as I was able to hear of the hon. Gentleman's speech, I gathered that he did not like that.
At any rate, I should like to narrow this argument to those products which are concerned with the conservation of energy—insulation materials of different kinds—which attract VAT. If the Bill passes in its present form, they will attract a higher rate of VAT.
I understand that the procedure on the Finance Bill prohibits my putting forward an amendment which would suggest to the Government that it would be to the country's advantage if insulating materials and other products which serve to conserve energy should not attract any VAT whatsoever. I cannot do that. There may be wisdom in trying to do it, in theory, but in practice it cannot be done within this Committee.
However, be that as it may, I hope that my hon. and learned Friend the Minister of State will recognise that the present state of the law is unsatisfactory and that the burden of VAT which will be carried by insulating materials comes, perhaps, at an inopportune moment bearing in mind that my right hon. Friend the Prime Minister drew the attention of the House only yesterday to the importance of having a package of energy proposals, in which conservation of energy will play a notable part.
My hon. and learned Friend will be aware that it is understood that until now materials for new construction and alterations, if supplied by the contractors, are VAT-free, and if purchased for these purposes by an individual, although attracting VAT, the tax can be rebated. This has meant, in effect, that double glazing and insulating materials are free from VAT.
However, arising in a High Court case in October 1978, which involved a company called Morrison and Dunbar, and


Mecca Ltd., which I understand wanted to convert a cinema into a bingo hall, Her Majesty's Customs and Excise has put out a discussion paper. This paper proposes, I understand, that improvements and alterations to buildings should be liable to VAT. This will obviously come as a great surprise to those in the building industry and to individuals, because were this to go through it would cut right across the design and strategy of the Government's approach to energy.
That is not the end of the matter. The present state of the law is also unsatisfactory. I think that it has, possibly, been so for some time. It has certainly led to lengthy arguments owing to the difficulty in determining the borderline between what constitutes a repair and an alteration.
Be that as it may, it has led to anomalies. I cite only one, but I understand that there are plenty of others. For instance, if one wants to insulate, as many people do and many more need to do, an attic or a loft for the first time, the product will be zero rated in the end, because private individuals get the rebate. However, if for various reasons, such as the advance of technology, one wants to add to the insulation in one's loft, if it is inadequate or has, perhaps, lost some of its efficacy, that will attract VAT—presumably, and I can only guess on this matter, because it would come within the category of a repair or maintenance. As I have said, there are other examples which concern improvements to boilers and heating arrangements which would make greater use of fuel.
My hon. and learned Friend needs no lecture from me on the value of energy conservation. He will be aware of a calculation issued by the previous Government which suggested that, if £450 million were spent wisely and properly on the conservation of energy and making more efficient use of energy, it would probably save the cost of two 1,500 megawatt nuclear plants which, give or take a few hundred million pounds, would come out at about £1,000 million apiece. Therefore, the spending of £450 million could result in a saving of £2,000 million worth of expenditure on producing new energy by nuclear reactors.
I am not personally against an expanded nuclear programme. That is not the purpose of my argument. My purpose

is narrow. It is to ask my hon. and learned Friend to consider two things as he comes to consider the amendment—which I cannot now press to a vote. Whatever revenue may be lost initially, when he comes to consider the effect of VAT on energy conservation, I hope that he will realise that if we ever go so far as to zero rate all of these materials the investment in energy-saving materials could yield a handsome return and balance to the Exchequer.
Secondly, I beg my hon. and learned Friend to consider the unsatisfactory nature of the law in view of the High Court judgment and the fact that, over the years, regardless of that judgment, there has been a wrangle over what constitutes a repair. I hope that he will consider both those aspects and especially the need to clarify the law. I beg to move.

The Chairman: The hon. Gentleman cannot move his amendment because, unfortunately, we have passed that part in the Bill. He may discuss it, and he has done so.

Mr. Michael Welsh: I support amendment No. 20. I am concerned about modernisation of houses Over the years grants towards modernisation or revitalisation have been of assistance in increasing our stock of housing. Over the past four years the Doncaster metropolitan council has made grants of £1 million a year. The youngsters living in those old houses have been grateful for that money and have brought their houses up to a high standard.
Through the policies of this Government the youngsters will suffer. There is a planned rate of inflation of 17½ per cent., and modernisation of houses will cost more. Local authorities will make a grant of £2,500 for modernisation and a youngster will have to find a further £2,500. If he goes to the bank he will find that the MLR has gone up 2 per cent. over the past few weeks. He then needs a contractor, and that is where this amendment comes in.
The £2,500 grant from the local authority is, by and large, for repairs. The increase in VAT to 15 per cent. will mean an immediate loss of £85 to the youngster. He has to find that from his own pocket or accept £85 less work. It does not end


there. The £2,500 from his own pocket is also, by and large, 50 per cent. for repairs, and he will lose a further £85.
Until a few weeks ago the total £5,000 needed for repairs was rated at 8 per cent. VAT. At the 15 per cent. rate the youngster loses £170. He has either to cut back on the modernisation or to borrow more money with the increase in MLR.
We should allow our youngsters to have good modern houses to live in. It is a top priority, and the increase in VAT does nothing to help to secure that desirable objective. Up to a few weeks ago things were not too bad for the young lad who bought an oldish house and asked for a grant to repair it. The planned 17½ per cent. inflation, the 2 per cent. Increase in MLR, and a 7 per cent. increase on his repairs, is prohibitive. The least that the Government can do is to accept amendment No. 20 and let the youngsters live in good modern houses.

3.45 p.m.

Mr. Patrick Cormack: I address my remarks to amendment No. 37, which I realise I cannot formally move. I appreciated the remarks made in the early hours of the morning by the hon. Member for Gateshead, West (Mr. Horam). We all congratulate him on his stamina and his conversion. In the past he was a doughty fighter for the heritage. One cannot blame him for thinking that Marsham Street was worthy of a temporary lapse. At least he saw from Marsham Street the heritage, even if he had to suffer an office in perhaps the most ugly building in London.
In view of what the hon. Gentleman said last night, I am slightly intrigued and absolutely delighted that the previous Chancellor and the Minister of State, who resisted such amendments so strenuously over the years, appear to have been converted. One can imagine that the right hon. Member for Llanelli (Mr. Davies), while he was at the Treasury, was repeating day after day the prayer of St. Augustine, "Lord make me good but not just yet." We are now in Government and the right hon. Gentleman is able to see the iniquities of VAT on repairs to listed buildings.

Mr. Denzil Davies: We are concerned with the 15 per cent. rate of VAT. That is  too high for repair and maintenance of  house.

Mr. Cormack: I am deeply dismayed that the right hon. Gentleman's return to virtue has stopped half way. This morning the hon. Member for Gateshead, West made some telling observations, in spite of real difficulties. I should have liked to suggest that repairs to listed buildings should be exempt or zero rated, but the Budget resolution has been so skilfully and tightly drawn that that is impossible. The only thing that one can suggest is that the status quo should be preserved. I accept that a multi-rate VAT is untidy and has many disadvantages.
I plead with my hon. and learned Friend to consider the matter with great care between now and the next Budget, to listen to my points and to receive deputations from people who are experienced in these matters, with a view to its being put right at the earliest opportunity.
Last night we had an entertaining debate on the bloodstock industry. It was a cross-party debate and there were objections to the amendment from both sides of the Committee. The fundamental point of the advocates of that amendment was that here was a great British industry that stood at risk because of the imposition of a high rate of VAT and the way in which it was administered. I do not suggest that we are here talking about a discriminatory situation vis-à-vis another foreign country, but, if blood-stock is an important British industry, tourism is one of the most important and growing industries in the country.
Tourists do not come to bask in our sunshine, enjoy our cuisine, or always just to see our races. They are attracted by our culture, heritage, enormous range of fine historic buildings, old towns and attractive countryside. The magnet of tourism will be very tarnished if we allow these buildings, which many people come many thousands of miles to see, to fall into a state of disrepair. Yet there is a real danger of that happening.
Before I develop the argument about these buildings, I must point out that if my hon. and learned Friend accepted an amendment along the lines of No. 37 it would cost the Exchequer a minimal


amount—between £2 million and £3 million. The hon. Member for Gateshead, West made a splendid point last night when he said that the receipts from VAT on repairs now exceeded the amount given by the Historic Churches Preservation Trust to historic churches. Therefore, justice and necessity are on the side of the amendment.
When we talk about listed buildings—I am glad that the Minister responsible is on the Front Bench today—we must realise that these buildings are statutorily listed, and those who own them or live in them have obligations placed upon them by law. They cannot add to the buildings or even repair them with ordinary materials. That is quite proper. They must abide by very stringent safeguards and regulations. Whether the building is a fine historic church, a small town house, a country cottage, a large country house or a stately home, it is an imperishable part of our heritage, and the people who live in it have certain obligations by statute.
Therefore, listed buildings could be quite easily detached from the category of other buildings and from the general tenor of the broad amendment No. 20. Here, indeed, is a specially defined case. There are strong feelings in all parts of the Committee about this matter. The necessity is real and I have illustrated the justice of the case. Now I shall demonstrate the necessity to do something quickly.
The hon. Member for Gateshead, West talked about country houses and the very real problems facing their owners who seek to maintain them. He also described the way in which the country would be impoverished, and the cultural heritage of the nation and the educational opportunities of our childen reduced if these places were no longer available for visits. We must bear in mind that 15 million separate visits were paid to country houses in Britain last year. Although tourism played an important part, the vast majority of those visits were made by British people, many of them children. These places are kept, not at public, but at private expense for the most part, and the owners have very real problems in seeking to maintain those properties.
Value added tax at 8 per cent. is bad enough, but at 15 per cent. it is crippling.

Although the Budget proposals on income tax are to be welcomed, nevertheless many of these owners are not rich and they will not benefit enormously from the income tax concessions. That is even more true when one considers the vast range of smaller historic buildings, the owners of which have statutory responsibilities but generally speaking do not have the resources with which to meet repair bills. Another 7 per cent. on a repair bill is a real deterrent to doing an effective job. In fact, it is an encouragement to botching it up.
I urge my hon. and learned Friend to consider the question of trusts. I declare an interest, although not a pecuniary one, as being a trustee of the Historic Churches Preservation Trust. It was founded 26 years ago, and during that period we have disbursed about £3 million towards the repair of historic churches. Until the long battle for State aid was won in the last few years—my right hon. and learned Friend the Member for Hexham (Mr. Rippon) was the first Secretary of State for the Environment to agree on this in principle and the last Government implemented his decision—the Historic Churches Preservation Trust was the one body which gave money for the repair of historic churches.
The real problem we now face is that suddenly our income has diminished. Much of it comes from covenants. That brings me to the income tax position once again. Splendid though the tax cuts are, they mean that our covenant income will be reduced. Although one hopes that those who covenant will take account of the Budget provisions, many will not and there will certainly be a time gap. Therefore, we have a reduced income and a burden of 15 per cent. VAT. It is not just that which makes us feel that we are not entirely honouring all the wishes of our donors and helpers, but the fact that many a small parish up and down the country will be deterred from tackling necessary jobs. I am a warden of a church in my constituency. A few years ago it had to raise £10,000. If one adds £1,500 to that, it represents a very sizeable imposition for a small village. Whether one looks at this in a secular way or a religious way, or both, one must admit that these buildings are deserving of special consideration.
It must be difficult for my hon. and learned Friend when time and time again he has to answer special pleas. So many people urge him to accept special cases. But the fact remains that Governments of both parties in their wisdom have, over the years, agreed that there should be listed buildings. They have said that these provisions are right and proper and that they are necessary for the preservation of our heritage. They have placed very real and often severe obligations upon the owners. The time has come when VAT is no longer a nuisance, but a very real, and in some cases a crippling burden, which can be a considerable deterrent to an owner undertaking repairs at all.
I want an assurance from my hon. and learned Friend that he will consider this carefully and sympathetically. Over the years he has shown himself to be sympathetic about our heritage and I know that he has a great knowledge of these matters. I hope that he will be prepared to see various groups to discuss this issue—he has already told me that he will see the Historic Churches Preservation Trust and I am grateful for that. We must try to work out a solution which will not impoverish the Revenue but rather enrich the nation.

Mr. Tam Dalyell: I declare an interest in that I am a council member of the Scottish National Trust and my wife is a member of the historic buildings council.
Hon. Members should understand that there are several views as to how the same end can be achieved. When hon. Members talk about bloodstock, for example, they must be aware that there is a question of priorities here. If I were to go along to many of my constituencies and tell them that the absolute priority for help was for the racehorses belonging to the Earl of Rosebery—my distinguished constituent—there would be many eyebrows raised. One must admit that last night the impression was given, by the attendance in Committee in the Finance Bill, that help to the racing industry was a considerable priority. Now we are giving the impression that help to historic buildings is an absolute priority also. All I am saying is that this must be seen in a general context.
First, what is the Treasury view of how extra VAT makes it more difficult to attract funds for the maintenance of historic buildings? Secondly—I gave the Minister notice this morning of my question—granted that it is a special problem for many historic houses that their sandstone exteriors have crumbled after 250 years and begun to deteriorate—that seems to be a critical period, as the Committee knows, because many of our most treasured buildings were built around 1800—what special help will the Government give to that range of houses? If no help is given there will be great difficulty in their restoration.
4 p.m.
I was recently guided, with other members of the historic buildings council, around the National Trust property at Killean. To make his point, the architect took a piece of sandstone from the facade of the building and crumbled it in his hands. Of course, the hon. Member for Staffordshire, South-West (Mr. Cormack) is quite right in saying that churches need restoring as well. However, the idea of restoring all these buildings over one or two decades is mind-boggling. We need to be convinced that it is better to try to cope with the problem through tinkering with VAT than by employing an overall Treasury strategy.
I hope to hear the Government come forward not with a "Yea" or "Nay" to VAT but with an overall strategy. It would be much better to channel available funds through the historic buildings council and the agencies that help churches, stately homes and many of the smaller houses—as the hon. Member for Dumfries (Mr. Monro) knows only too well from examples in his constituency. The National Trust has done an excellent job there. I believe that if the money were channelled through the agencies rather than tinkering with the effects of the fiscal system, particularly through VAT, the position would improve.
Although I have many of the same aims as the hon. Member for Staffordshire, South-West, I express considerable scepticism about fiddling with VAT to achieve those aims.

Mr. Michael Morris: I should like to address my re-marks to amendment No. 37. I shall not


follow in the footsteps of my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack), because he has already made out a persuasive case.
I shall address my remarks to the anomaly that appears to exist in relation to listed buildings that are damaged by fire. There is a strong case for exemption from VAT of the reconstruction of listed buildings after damage by fire. I remind the Committee that if a listed building is dagamed by fire, and its owners, in agreement with the responsible planning authority, decide that the building is too far gutted to be restored, it can be rebuilt in absolute facsimile—as has been done on a number of occasions—and that rebuilding incurs no VAT. New constructon is zero-rated.
On the other hand, a factor that is likely to impinge on higher-graded buildings is that, if it has been decided in the national interest that the facade—or a part of it—of the building should be restored although the internal construction is completely gutted, the VAT officers have no discretion about charging VAT. That would apply even where the facade might amount to as little as 4 per cent. or 5 per cent. of the total value of the contract.
Logically, that is anomalous. However, it is even more anomalous when the law under the General Rate Act is examined. Under schedule 1(2)(c) to the General Rate Act 1967—rating of unoccupied property—no rates are payable on an empty listed building. Therefore that precedent has been set. Yet it is strange that the hands of the VAT officers are tied in relation to facades.
Two recent appeal cases of this nature were Thomas Briggs (London) Ltd. at the London tribunal in 1977, and the St. Luke's church at Great Crosby at the Manchester tribunal, reference 78/59. I believe that it is intended that the latter case should come up before the High Court on appeal. I hope that the Minister will have a close look at the anomaly.
I declare an interest by saying that I attended Bedford school, which was gutted by fire in the early hours of the morning of 3 March 1979. The restoration of that school will cost about £2 million. The inside incompletely unusable but the facade is to be kept. As

the law now stands it would appear—though it is not proven entirely—that the charity will be landed with the cost of £300, 000 in VAT to keep an external facade in the interests of the community. I do not expect a reply on this matter this afternoon but I hope that the Minister will look at the problem in order to find a solution that will meet the needs of those who are affected.

Mr. Stephen Ross: I shall make a confession and declare that I, too, was educated at Bedford school, like the hon. Member for Northampton, South (Mr. Morris). The school has never officially recognised that fact, but I should like to support his plea—although it is most unlikely that the school will come to me for assistance. However, the school finds itself in a tragic situation, particularly with the increase in VAT. Anything that can be done by the Government to assist that school and others in the same unfortunate position is badly needed.
I support amendment No. 37, upon which the hon. Member for Staffordshire, South-West (Mr. Cormack) made such eloquent and persuasive comments. My second interest is that I am a member of a buildings preservation trust. It has taken a long time to persuade my constituents that there is a great deal of architectural interest in the constituency. We have many Georgian and Victorian buildings that have been allowed to fall into a disgraceful state of neglect. However, over the past 18 months a number of local people have come together to try to put that right. At long last, our three local authorities have been persuaded to set aside funds, in each case about £30, 000. But, just as one or two minor schemes are about to be started, we find that we are faced with additional costs.
That cannot be right thinking by anybody in the country, whether by this or the previous Government. We are appealing to private industry to assist us and we believe that these trusts should not be dissuaded from taking steps to restore buildings by the actions of this Government.
My second plea is for our churches. My hon. Friend the Member for Come Valley (Mr. Wainwright) will know that I have received a letter from the vicar


of Newport, whose church was rebuilt by the Prince Consort in the middle of the last century. It now suffers eternally from vandalism. Almost every week windows are broken. The very small flock managed to find the money to repair the building, but now the repairs will cost 7 per cent. more because of the VAT, and I think that we have come to the end of the line. There is no way in which we can go on persuading the same small band of people to keep on coughing up money.
When we go to East Anglia and see the fantastic churches in Suffolk and Norfolk, I wonder what their future will be. Shall we be able to preserve them? I know that we have taken certain steps.

Mr. Dalyell: The great glories of medieval English architecture at Lavenham and Long Melford are in need of preservation and restoration, but I refuse to believe that tinkering with VAT is the way to deal with the matter. Surely it must be done through the historic buildings councils and by channelling money through various other agencies.

Mr. Ross: I was merely saying that I hoped that we should have a statement of intent from the Government. I entirely agree with everything that the hon. Gentleman said in his speech.
A fortnight ago about half a dozen windows in the church in the centre of Newport to which I have referred were smashed. Money was found to repair them. But next time that happens it is unlikely that people will be able to scrounge around to obtain the money, because the bill will be that much higher. We have reached the end of the line.
It seems crazy that on the one hand we are prepared to give grants for conservation schemes through the historic buildings councils and other bodies, including some local authorities, and on the other hand the Government are taking money away. It is time the whole matter was cleared up.
Perhaps I may put forward a suggestion that was made to me at lunch time today. If we cannot give zero rating for the repair and maintenance of historic buildings and ecclesiastical buildings generally, can we not at least do so within conservation areas? That would

be a step in the right direction, if the finance is not available to do it throughout the country. We should not leave the subject any longer. It is vital.
Many hon. Members visit the Isle of Wight and go sailing in Cowes. I am ashamed to say that I think that the town of Cowes is in a very rundown condition. We put a plaque on a house there to say that we were honoured that the famous headmaster of Rugby school, Thomas Arnold, was born in it, but the house has been shored up with timber because no one can repair it.
I am sure that the problems in my constituency are repeated everywhere else. There are empty houses that could be used for occupation by the many people on our waiting lists. I hope that the Government will not turn a deaf ear to what we say but will do something positive in the very near future.

Mr. Michael Latham: It is a great pleasure to speak after the hon. Member for Isle of Wight (Mr. Ross), though it may not be such a great pleasure for him to listen to me, because he and the hon. Member for Liverpool, Walton (Mr. Heffer) will have to hear a repeated version of what I said at a function dealing with this issue attended by all three of us only three or four hours ago.
I have an interest in the matter, as a director of a building company. I am also a director of Shelter, although that is not a paid interest.
I am not in a position to support either amendment No. 37, in the name of my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) or the Opposition Front Bench amendment, amendment No. 20, because neither achieves what I want, which is zero rating in both the areas with which they are concerned. Because of the money resolution, the amendments cannot, as my hon. Friend clearly explained, aim to achieve zero rating, but they would bring about a standstill at the 8 per cent. rate of VAT.
As hardly a word has been said today about amendment No. 20, which was moved by the hon. Member for Gateshead, West (Mr. Horam), last night, it may help the Committee if I remind hon. Members how the present position came about. New construction is and always


has been zero rated. It is maintenance and rehabilitation work that is positively rated, and always has been.
Back in 1972, when the then Conservative Government produced their Green Paper on the value added tax for public consultation, I was one of the members of the staff of the National Federation of Building Trades Employers, and I had the job of drafting our comments on the Green Paper. We said that it was ridiculous to have zero rating for new construction and positive rating for maintenance, because there would be gross anomalies, moonlighting, irregularities and so on. Our advice was not accepted.
4.15 p.m.
It must also be said, in view of the Opposition amendment No. 20, that that advice kept on being given during the lifetime of the Labour Government and was continually rejected for five years. The Labour Government made no attempt to zero rate maintenance work, although the matter was frequently raised in the House of Commons and was the subject of regular representations from the industry. We are in exactly the same position as we were when the tax was introduced in April 1973, except that the rate has changed.
It is worth remembering why the then Conservative Government rejected zero rating for maintenance. I think that there were two reasons. The first was presumably cost. I believe that the latest figure for such a concession is £300 million, although how scientifically it has been calculated I should be interested to hear from my hon. and learned Friend the Minister of State. I do not know how he calculates it, because much maintenance work is done on a self-employed, non-registered basis. No doubt my hon. and learned Friend can illuminate the Committee on this matter.
The second and more coherent reason for rejecting zero rating advanced at the time by the Conservative Government, and advanced again by the Labour Government, was that if maintenance work were zero rated there would be gross anomalies over do-it-yourself. The householder who buys a pot of paint at the paintshop to redecorate his house pays VAT on the point. It is a matter of hard fact that—not simply because of VAT, but for many other reasons—the

vast majority of domestic internal painting work, perhaps now 90 per cent., is do-it-yourself. Hardly anybody now calls in a painting contractor, because people cannot afford to do so. That was the case when the tax was 10 per cent. and 8 per cent., and it will continue now that it is 15 per cent.
It may be said that those reasons are not wholly persuasive and that they can be overcome. There is another reason that my hon. and learned Friend may choose to give, although it is not likely to impress many hon. Members. I refer to the question of the Common Market. It is well known that the. EEC does not like zero rates. If Ministers wanted to zero rate maintenance work, which I am sure all those who support the amendments really want, they would find themselves with a contrary pressure from the Common Market. They would be told "Instead of zero rating maintenance work you should be positively rating new construction work to bring them both into line, so that the anomalies are avoided." I am sure that no hon. Member would accept that, because it would mean a substantial increase in the price of new houses, and that would certainly be resisted by all hon. Members. The Committee should recognise that those difficulties cannot be easily overcome.
Even if VAT were to remain at 8 per cent., as amendments Nos. 37 and 20 recommend, what would that achieve? There would be a two-tier rate, which would be undesirable in principle. Secondly, would it make any practical difference?
Let us talk about the domestic householder, who is the main interest of amendment No. 20. I do not believe that VAT, although certainly serious and important, is the main determinant in preventing the householder from employing a contractor to do domestic maintenance work. On the contrary, the real problem is the price of building work generally. If it is to be done effectively by a proper contractor who is properly registered, and not by a cowboy, proper labour and material rates must be paid, and that puts the price well beyond the domestic householder.
Many domestic householders get round the problem by d-i-y, which is already positively rated for VAT purposes.


Therefore, I do not believe that even if the amendments were made they would make a great deal of difference in the domestic sector, although if we had zero rating that might indeed make a difference.
I turn now to the more specialised areas of my hon. Friend's amendment. I find amendment No. 20 impossible to accept in its present form, although I could have accepted a call for zero rating. On amendment No. 37, different considerations arise. The scope is much smaller, the concession financially much less and the anomalies less obvious.
Like my hon. Friend, and the hon. Member for Walton, I have the pleasure of sitting on a number of committees of the Church of England. I must tell my hon. and learned Friend the Minister of State that the proposal for a 15 per cent. Tate on maintenance work will have grave effects on the churches and the maintenance of these important buildings. No one knows better than the hon. Member for Walton that work on historic churches is exceptionally craft-intensive. Stonemasons of the highest quality are required when repairing Salisbury Cathedral or Lincoln Cathedral. They do not come easily. They do not come cheaply. The added bill for their labour will be a serious matter. Money has to be raised almost entirely by voluntary subscription. I hope that my hon. and learned Friend recognises that this will not be an easy task.
I would like to refer to historic houses. I had the privilege, in the previous Parliament, of serving on the Environment Sub-Committee of the Expenditure Committee which produced a report on the National Land Fund—a report that I want to see this Government implement as quickly as possible. Like my hon. Friend the Member for Staffordshire, South-West, I have been pressing the Chancellor of the Duchy of Lancaster to take action and to bring forward a Bill as quickly as possible. The report made clear that historic houses are one of our major tourist attractions. It will not be sufficient for my hon. and learned Friend to say that they can put up their prices. If those houses are to be kept in an adequate state of repair, proper consideration must be given to this new burden,

whether by tax deduction or by some other means. It will not be possible simply to generate extra cash. My hon. and learned Friend will have to consider this matter seriously before the Finance Bill next year.
I would like to say a brief word about insulation. If the Minister is to accede to the proposal put forward by my hon. Friend the Member for East Grinstead (Mr. Johnson Smith), I hope that he will investigate the considerable number of irregularities that have occurred. Under the insulation scheme introduced in the Homes Insulation Act by the previous Government, 200, 000 grants have been made. That is nearly £8 million of public money.
The Agrément Board and the Department of the Environment have still not produced an approved list of materials suitable for this purpose. I was with the Agrement Board only last Tuesday. It is still working through the enormous number of materials that have been submitted. It is totally unsatisfactory that a scheme of this kind should be permitted to go ahead before the approved materials are properly tested. This matter should be carefully borne in mind. My hon. and learned Friend has heard the debate. He knows the strong feelings that exist on both sides. I hope that he will take full account of them.

Mr. Eric S. Heffer: The hon. Member for Melton (Mr. Latham), like myself, knows the industry well. I do not entirely agree with his arguments. It is true that we should be asking for zero rating, but that is impossible. We have to argue within the terms of the Finance Bill and the amendments that have been tabled. This means that we can argue only for the continuation of the present rate. I realise that we will have different rates, but it it is important not to go beyond 8 per cent.
I seem to spend a lot of time, as the hon. Member for Walton, combating landlords. I do not regard myself as the landlord's friend, and landlords in Walton do not regard me as their friend. The reason is simple. I spend hundreds of hours in the course of the year trying to get landlords to carry out necessary repairs. If the VAT rate goes up to 15 per cent., the difficulties encountered with landlords will increase. At the moment,


when landlords finally get round to carrying out repairs and maintenance they might at least employ proper building workers, although "cowboys" are sometimes involved. If the rate is increased to 15 per cent., the number of "cowboys" carrying out repairs and maintenance for landlords will also increase. These are good reasons why Ministers should think again. Ordinary working people—who do a damned good job—living in the type of houses rented by landlords in my constituency, find great difficulty getting their houses repaired and maintained properly.
I believe that the Bill will only aggravate an already difficult situation. I agree that the work should be zero rated. I argued for this course to be adopted when I sat on the Government side of the House. I am delighted to hear hon. Members who are at least consistent on this matter. There is an across-the-board lobby on the construction industry. Some hon. Members feel strongly about the industry and believe it is important that we should speak, as far as possible, with one voice on these matters.
Thousands of ordinary people who live in rented property—some have lived in that property for 45 years—already face great problems in trying to ensure that landlords keep standards of repair and maintenance up to a decent level. They will find themselves in a very difficult situation. The problem does not apply to all landlords, but it applies to many—those who believe that owning houses means getting out the maximum and putting back the minimum in repairs and maintenance. If the rate goes up to 15 per cent., there will be an added reason for an increase in rents. This will put a further burden on to the shoulders of tenants living in that property.
Another interesting point raised by the hon. Member for Melton, with which I agree, is the attitude of the EEC. It is well known in the House of Commons that I am not an enthusiastic supporter of the European Economic Community. At one stage in my early political life, I believed that we should go into the Common Market on the grounds of sheer political idealism. When I saw what entry to the Common Market really meant, my backsliding was much more rapid than that of my own Front Bench; they came late to the scene.
There are forces within the EEC that would like to see us impose VAT on new construction. The Government's efforts in the direction of the construction industry have not been marvellous. Even Sir Maurice Laing, who has just received an award from Aims of Industry for his great struggle for freedom against nationalisation of the construction industry—that was a phoney battle anyway, since we never intended to nationalize land—[HON. MEMBERS: "Oh."] Conservative Members obviously cannot read. If they could read, they would know what we said.
The truth is that Sir Maurice Laing has made some interesting comments about the Budget's effect on the construction industry. Raising the rate will have a serious effect. I am sure that he will agree with me that it should be zero rated but that, if not, it should not bear a rate of 15 per cent. We do not agree on other issues, but I am sure that we will agree on that.
4.30 p.m.
The effect on repairs and maintenance will be marginal, although in the most important section of the industry, but there will also be a marginal effect on employment. More and more "cowboys" are likely to be involved, but good bona fide craftsmen and workers will be affected. Their unemployment is already far too high and it will get worse because of the Budget.
I apologise to the hon. Member for Staffordshire, South-West (Mr. Cormack) for not being here for the whole of his speech, but I am sure, judging from the part I heard, that I agreed with most of it, as I always have done. It is vital to maintain our historic buildings and to develop them in the best way. We have a wonderful heritage, to which many people do not give sufficient attention I often go round historic buildings as one of thousands of ordinary people, enjoying what they are seeing. It is part of our history.
Things are slightly different now, in that most of these buildings can no longer be maintained by the families because the feudal days have gone, but that does not mean that they should not be maintained. In the old days working people only worked in those buildings. Now at least more and more can see them.
Therefore, I fully support the hon. Gentleman's amendment and hope that the hon. Member will not be seduced by fair words from the Minister, who will probably say "We have the greatest sympathy with the amendment and we understand the problem, but we cannot possibly accept it." If that is the Minister's attitude. I hope that the hon. Gentleman will stand firm for a vote. I shall certainly be in the Lobby with him.

Mr. James Hill: The hon. Member for Liverpool, Walton (Mr. Heffer) described the Budget's serious effects on the construction industry. He must have spent the last few years cocooned in the House of Commons and unaware of the effect on the industry of shortage of materials and escalating wages.

Mr. Heffer: I cannot remember whether the hon. Member has been out of the House for a period, but his hon. Friends who were in opposition in the previous Parliament will know that, day in and day out, I never stopped arguing about the effects of my own Government's policy on the construction industry. I think that I might have had a marginal effect—not very much, unfortunately—by expressing that attitude. I just wanted to get that on the record.

Mr. Hill: Whether the hon. Gentleman had a marginal effect or not, there was no effect outside this place. He may have been lobbying his Ministers constantly for the last five years, but during that time the number of bankruptcies in the building industry have risen to the point at which there is no future in apprenticing one's sons in the industry.
The industry is delighted that the Community Land Act provisions are to be discontinued. We in the industry are hoping for more building land as a result. It is no good the hon. Member describing what a gallant fight he has been making. It was ineffectual and did not show where it matters—in the industry's labour pools. However, I thank him for his efforts.
Anyone with a logical mind will agree that 15 per cent. VAT on repairs and maintenance is akin to madness. No one—whether local or national politician,

building developer or householder wanting to do his own work—wants a further imposition. The hon. Member for Walton may be right about the class structure and the fact that a private landlord may do even less work with a rate of 15 per cent. than he did when it was 8 per cent. Nevertheless, the crux of the problem is not so much the VAT—I agree that repairs and maintenance should be zerorated—as the inequitable levels of rents chargeable by private landlords, which effectively bars them from doing repairs and maintenance, whatever the VAT rate.
This debate is not about simply the public or private residential sector. Repairs and maintenance in the business community will provide more work for the hon. Member's friends in the industry, but VAT at 15 per cent. logically leads one to suppose that 15 per cent. less work will be done.
I hazard a guess that VAT on repairs and maintenance throughout the EEC is not 15 per cent. In Italy, for example, the Government would be foolish to charge VAT on repairs to historic buildings and even domestic housing.
It is difficult to support any motion which bears the name of the previous Chancellor. That would be tantamount to an abdication of responsibility on our part. If the Labour Party had these views in the past, why did it not carry them out? However, the situation is grave, particularly on council repairs. Will the new rate mean a loss to the repairs and maintenance funds in our constituencies? Will money be transferred from one pocket to another? Surely we could zero rate not only repairs and maintenance but the insulation of property. However, that is a different matter.
I support what my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) said about historic and important buildings, although for me that problem is second to the problem of domestic residential property. I hope that the Minister will look at the matter again, if not today then in a future Budget. There is a good case for zero rating all repairs and maintenance, not only to buildings of historic and architectural importance, but to ordinary residential property, whether public or privately owned.

Mr. Bob Cryer: Conservative Members are not taking into account the compensations in the reduction in income tax levels which the Government are continually claiming. They refer to industry, owner occupiers and owners of historic buildings, and claim that the income tax concessions will bring new enthusiasm and a new zest in life, and will transform the economy. If the economy is not transformed they will be in a terrible mess. What will happen if the new elixir of cuts of a few percentage points in income tax does not work?
Conservative Members have tabled amendments for exemption from VAT. Do they not believe in the new elixir? Did they not, during the election, put forward the case for a switch from direct to indirect taxation? Did they say then that there should be a number of exemptions? We are seeing them wriggle. Conservative Members are helping Labour Members to prove that direct taxation is fairer than indirect taxation. Increases in VAT affect all sorts of people, from those who live in grand houses—covered by amendment No. 37—to those who wish to install or improve insulation—a highly desirable aim, especially during an energy crisis. They are to be taxed because the policy of the Government is to switch from direct taxation to indirect taxation. It is a consequence of their principle and policy.

Mr. Latham: Why did the former Prime Minister, during the election campaign, say at the Labour Party press conference that if the people wanted a change from direct to indirect taxation that would have to be done?

Mr. Cryer: I do not stand at elections on the basis of personalities. The Labour Party succeeds not on the basis of personalities, but on the basis of policies. I stood on the Labour Party manifesto. Over the next five years, I shall be contributing to the new manifesto and trying to ensure that we develop procedures to ensure that the next Labour Government read their manifesto and undertake to adhere to it, word for word, when we have a Labour Government returned with a massive majority. Conservative Members may laugh, but they should go out into the country and discover how people regard their party. The Conservative Party held out the switch from direct

taxation to indirect taxation as some gigantic promised land. Now we see the reality. It denied that VAT would reach 15 per cent., but it has reached that figure. It is reaping the whirlwind. The Conservative Party is becoming increasingly unpopular and, as its industrial policies put workers on the dole in hundreds of thousands, we shall see political changes. Much political education is taking place. People are realising that a Conservative Government means a Government devoted to the interests of the class they represent and against the interests of the majority who work for their livelihood and their families.
4.45 p.m.
We have laid the preamble and put to scorn the claims of Conservative Members that moving a little on VAT will remedy the grave injustices. Labour Members would prefer zero rating, but we are limited to a return to 8 per cent. because of the procedure of the Finance Bill. No one would object to reducing VAT on buildings of historic and architectural importance. We all appreciate our inheritance. Contrary to the wishes of Conservative Members, most of whom represent the owners of the grand houses, the houses are now accessible to the public.
Lord St. Oswald of Nostell Priory, for example, is not an enthusiastic Socialist, and other owners of grand houses are also zealous adherents of the Conservative Party. The increase in VAT has not helped them. We all appreciate and visit these houses and agree that it is important that they should be maintained. The VAT increase is an added burden for the owners. We should like a reduction in VAT on repairs and maintenance of historic homes.
But what about the houses which are not so grand and which are lived in by ordinary working people? Our amendment No. 20 is my priority. The Government should be concerned with widows, widowers, pensioners and owner-occupiers who are faced with property repairs. In my constituency a large proportion of the housing stock consists of older housing from the nineteenth and, at best, early twentieth centuries and much of it needs a great deal of renovation and repair. In Tory-controlled Bradford, the record of council house building is


abysmal. Many Conservative-controlled authorities are eagerly selling their housing stock. Elderly owner-occupiers cannot afford the cost of repairing an aged house, but they have no alternative. Local authority dwellings are not available. They have to join a lengthy list and the only way to obtain a bungalow or a flat on the ground floor is to have a high degree of medical priority. Increasing VAT will make the repairs more expensive.
A constituent of mine needed his roof repaired. The cost was £1, 000. The increase in VAT will add another £70 to that bill and put the repair that much further out of his reach. The owner-occupier who has savings sees the prospect of their being swallowed by increases in the cost of repairs. It is nonsense for the Government to make a further imposition on the cost of repairs and maintenance.
My amendment No. 35 was deliberately designed to ease the tax burden by exempting those living alone and running a home, whether rented or owned, from the £750 of taxable income at 25 per cent. That would save them £190 per year. Single persons are often in more difficult circumstances than are married couples. Some gesture to help them should be made by the Treasury. Instead of that, the Government are imposing further burdens. It is an unfair imposition.
I made representations to the local authority and it agreed to make loans not only in general improvement areas but throughout the metropolitan district council area to meet repair costs. This is now a charge on the property. It is an indication of the seriousness of the difficulties when a local authority is prepared to make special provision throughout its area.
Now it appears that there will be a further burden. Not all local authorities are prepared to deal with the problem.

Mr. Michael Morris: There is nothing new in putting a charge on a property. That has been done by local authorities for 15 years to my knowledge, and perhaps longer.

Mr. Cryer: That may be true, but Bradford did not do it. The problems

created by the cost of repairing old property was so great that after representations from me the local authority agreed to meet the situation to some degree. That is a useful contribution. Bradford did not agree to act until a couple of years ago.
The Government are now placing a further burden on those who are less able to meet the obligations. In spite of the Government's protestations about encouraging owner occupation, they are discouraging owner occupation by placing a further burden on those who are least able to bear it.
That is symptomatic of increasing the rate of VAT. It will bear most heavily on those who are least able to cope. For those reasons. I hope that we shall press amendment No. 20. I imagine that amendment No. 37 will disappear along with the courage of the hon. Member for Staffordshire, South-West (Mr. Cormack). We should try to make a dent in the intolerable burden which the Government are placing upon ordinary working men and women.

Mr. Alexander W. Lyon: I rise only because of the fear of my hon. Friend the Member for Keighley (Mr. Cryer) that amendment No. 37 may disappear. I agree with his attack on the redistribution of income between direct and indirect taxation. I said that yesterday. But I was surprised at the response from the Government side. I hope that they long have the delusion that this redistribution will not be unpopular in the country and not hurt their electoral chances. The nearer we get to the next general election with them still in that state of delusion, the better our chances.
My anxiety about VAT on the repair of historic buildings relates not only to Nostell Priory. I imagine that Lord St. Oswald will make enough out of the Budget to enable him to provide for the repairs to the priory. But there is a serious problem for historic buildings and buildings of architectural merit in a place such as York when the occupier of the premises has a relatively modest income. A serious setback to the conservation of small buildings and houses which are owned by such people will occur if there is an increase of this size in VAT.
I do not believe that the Minister of State will say that he will accept the


amendment. That means that there will be difficulty for schemes such as that run by the historic buildings council for town houses. It will not be possible to make up for the difference in the rate of VAT.
Such organisations will be able to reclaim VAT on grants from local authorities, but they will not be able to do that with grants from the Department of the Environment. If they are to be subject arbitrarily to the cash limits without consideration being given to this important matter, there will be a serious setback to the conservation of the historic core. I hope that the Minister will take these arguments into account when allocations from the Department of the Environment are made for this purpose.

Mr. Douglas Hogg: I support the preliminary remarks of the hon. Member for Keighley (Mr. Cryer). I was surprised that I agreed with him to the extent that I did. Indeed, it caused me some alarm.
A number of my hon. Friends support the amendment. It is important that they should bear in mind a basic principle—that one cannot go on reducing the base of VAT without, at the same time, substantially reducing the ability of the Government to reduce direct taxation.
We have embarked on a policy of reducing direct taxation and therefore we should not reduce the base of VAT. I hope that hon. Members will bear that in mind.
I am in favour of a substantial reduction in the burden of direct taxation. Inevitably that means that we must accept a significant increase in the burden of VAT. I see no possible reason for exempting buildings from that approach. I urge hon. Members to reject the amendment.

Mr. Cormack: My hon. Friend has not been in the Chamber. He has not listened to the arguments. He has not heard about the sums of money that are involved. He should not, therefore, make such an observation.

Mr. Hogg: I have heard the arguments before at considerable length. I am confident that my view is correct.

The Minister of State, Treasury (Mr. Peter Rees): The hon. Member for Keighley (Mr. Cryer) said that his pre-

amble would put my hon. Friends to scorn. He introduced a note of partisan fervour which had been absent from the debate. I make no complaint about that, but he could have reserved his fervour for another debate. The debate was interesting. It was characterised by many highly informed and expert views from both sides of the Committee. Before I deal with those interventions I wish to state again the general considerations which inform the Government's thinking on VAT. I appreciate that I have used some of these arguments before, but there is always an element of repetition in Committee debates. I hope that I shall carry the Opposition Front Bench with me in saying that VAT is and should be a broadly based tax and that it is not suitable for advancing particular social and political objectives.

Mr. Denzil Davies: The hon. and learned Gentleman said that yesterday. He should discard that part of his Treasury brief and try another argument today.

Mr. Rees: The right hon. Member is being unusually harsh. He is usually courteous and self-controlled. I have heard some of the arguments that have fallen from his lips before. They may have been good and they may have been bad, but he has repeated them. Since some hon. Members who contributed to the debate did not hear earlier debates on other amendments, it is right to set this debate in its context and to approach it from the broad question of principle. I was taking up the theme introduced by' the hon. Member for Keighley. We should consider the broad principles of VAT. The hon. Member did not receive universal commendation from all of my hon. Friends. Perhaps that is what motivated my hon. Friend the Member for Grantham (Mr. Hogg) to make his powerful intervention at a late stage of the debate.
VAT is a broadly based tax. We should try to maintain the base. If the base is eroded, leaving aside the loss of revenue, it follows that there will have to be higher rates on a narrower base. If the base contracts all the time then the problems of definition, as the hon. Member for West Lothian (Mr. Dalyell) perceptively said—

Mr. Davies: Will the hon. and learned Gentleman tell us what the loss of revenue would be if this amendment were accepted?

5 p.m.

Mr. Rees: I will come to that. The right hon. Gentleman is showing unaccustomed ardour. Perhaps he had more hours in bed than I did. Obviously he is entirely revived, freed from the restraints of office. I resume on the general principles before I come to the amendment.
As the hon. Member for West Lothian observed, the problems of definition that will become acute are those which were illuminated with such force and vigour by Sir Gerald Nabarro. It is better—I am sure that hon. Members on both sides of the House, on reflection, will agree—that we have a broadly based tax with the fewest possible exceptions.
We can all make special cases. Some of my hon. Friends have done so with eloquence. However, I believe that they will realise overall that it is better to preserve the broadest possible base for this tax. Those who plead for special exemptions are honour-bound to consider what alternative sources of revenue could be tapped to supplement the loss of revenue which would result if their amendments were carried. This point was touched on by the hon. Member for Keighley and he and I will have a plainly argued difference of opinion.
The hon. Member will say that there is no case at all for an increase in VAT and that we should concentrate the weight of our fiscal impost on direct taxation. I like to think that that is a point that was put fairly and squarely to the British electorate, which came down with an unequivocal answer on 3 May, and the Government are doing only what they were encouraged to do by their votes.
I turn to the specific amendments and the powerful contributions which were made in discussing them. Amendment No. 20 was moved lucidly and moderately—and I hope that he does not lose face among his colleagues if I say so—by the hon. Member for Gateshead, West (Mr. Horam). I believe that it was his debut on the Opposition Front Bench in a financial debate and I hope that the Committee will allow me to congratulate

him. He has, of course, the tremendous advantage over his right hon. Friend the Member for Llanelli (Mr. Davies), in that he comes with a fresh mind and untainted by experience in this area during the past five years. My hon. Friends the Members for Melton (Mr. Latham) and Southampton, Test (Mr. Hill) reminded him of that and, if I may go back to the racing analogy used earlier in this debate, he does not carry so much lead in this field.
The hon. Member can argue with more vigour for all the special cases which he would have been disposed to resist had he been sitting where his right hon. Friend sat over the past five years. His right hon. Friend knows how many times he resisted pressure for precisely the good causes that are now being pressed on this Administration. The right hon. Gentleman murmurs "Eight per cent." I am reminded of what was said by, or about, Fouche during the French Revolution, that treason was a question of dates. To the right hon. Gentleman VAT is a question of rates.
I believe it is a matter of principle. All the arguments—I made this point yesterday and I will go on making it so long as he puts the issue to me—that the right hon. Gentleman and his hon. Friends have advanced for special cases were arguments for zero rating or exemption. It is not a question of the difference between 8 per cent. and 15 per cent. He believes, as do some of my hon. Friends, that some cases deserve exemption or zero rating. I listened closely to his arguments and I think that they led, logically, to that conclusion.
The right hon. Gentleman and my hon-Friend the Member for Melton asked for the cost of the amount of VAT collected on repairs. I may have given a figure of £300 million. The right hon. Gentleman will be under no illusion that I am not sufficiently numerate to have done the sums. The figure of £300 million given for zero rating repairs and maintenance is based on consumer expenditure estimates for 1979–1980 on repairs and maintenance work performed by contractors and purchasers of do-it-yourself materials. I will pursue the matter if the right hon. Gentleman wishes for more detail, but I think it will be better for the Committee if we pursue this rather technical argument in public.
The cost of accepting amendment No. 20 would be around £100 million. That is not negligible. According to the hon. Member for Keighley this could easily be recouped by ¼ per cent. on the basic rate of income tax. As I have said, the British electorate have given their view on that. I approach amendment No. 20, and I hope that, on reflection, the Committee will agree—I appreciate its merits, which have been canvassed by the previous Administration—in the belief that we should preserve the broad base of VAT.
There are definitional problems in that the thrust of the argument—though it may have not been put quite so exclusively as I have put it—was that it should be for essential repairs. The hon. Member for Keighley will appreciate the difficulty of defining precisely what constitutes an essential repair, though the right hon. Member for Llanelli is obviously getting worried about this argument. He did not move the amendment. If he wishes to intervene I do not discourage him, but he has a very able colleague who I thought did full justice to this amendment. The hon. Gentleman will realise that this amendment in its present form would permit a reduction in rate on inessentials, perhaps on mere interior decoration; the kind of things which the hon. Member for Keighley—who constantly uses the phrase "ordinary working people"—suggests that ordinary people might not be disposed to do. I suggest that ordinary working people do like to redecorate for aesthetic reasons. I have never quite understood the scope of that phrase.

Mr. Denzil Davies: I do not quite understand this problem of definition, because the words "repair and maintenance" are taken exactly from the present legislation. If there is a definitional problem it is a present problem and is not changed in any way by reducing VAT to 8 per cent.

Mr. Rees: Perhaps I did not put my argument sufficiently clearly. What I am saying is that the thrust of the argument of the hon. Member for Keighley was that meritorious repairs should be entitled to this reduction. Does the Committee feel that every form of interior decoration that is comprised in this amendment should be rated at 8 per

cent. while other equally worthy activities should be rated at 15 per cent.'? It is for the Committee to judge, but at the end of the day I face this amendment by praying in aid the general considerations to which the right hon. Gentleman took exception but which I hope the Committee will consider good.

Mr. Latham: Will my hon. and learned Friend address his mind to the question why we still persist with the situation—which has existed since 1973—in which new construction is zero-rated but maintenance is positively rated? I urge him to reconsider that matter.

Mr. Rees: That could in some sense be regarded as anomalous. It could, equally, be cured by introducing a standard rate for both those activities, though I am not saying that this is in the Government's mind. As my hon. Friend is aware, that situation obtains in many Common Market countries. If he is so rigorously logical he will perhaps follow that particular argument through to its logical conclusion, but I do not know whether it is a conclusion that would attract him, me, or, indeed, the bulk of this Committee.
I turn to amendment No. 36, spoken to so persuasively by my hon. Friend the Member for East Grinstead (Mr. Johnson Smith). The amendment is designed to keep at 8 per cent. insulation materials and other products designed to conserve energy. There are certain problems of definition in his amendment, however concisely it may have been drawn. What exactly is meant by insulating materials? Is plaster work or panelling regarded as insulating material? Will the Committee regard that as something to be charged at a lower rate?
The conservation of energy is, of course, an objective that will command the support of the whole Committee. As for the example raised by my hon. Friend, does he believe that bicycles should be charged at the lower rate, as indeed they could be, under the form of his amendment? I appreciate that he wishes to ventilate the general principle and not the details but I hope he will permit me to observe that, as at present drawn, his amendment poses certain practical difficulties.
My hon. Friend also raised some specific difficult points on the application of the Mecca case, which I believe turned on the conversion of a cinema to a bingo hall. I believe that the Customs and Excise endeavoured to circumscribe to a degree the meaning of alterations, endeavouring to say that it was a question of part alterations and part repairs—that part should be zero rated and part should be charged at the standard rate.
That leads me to remind the Committee that alterations are zero rated and have been generously interpreted up to now. A great number of operations that achieve the objective that my hon. Friend the Member for East Grinstead has in mind, such as cavity wall insulation and double glazing, are in fact zero-rated. As my hon. Friend pointed out, the Customs and Excise authorities are a little concerned about that generosity of interpretation, but certainly no firm decision has been taken, and my hon. Friend's views, which seemed to find some favour in the Committee, will be borne in mind.
Let me reassure my hon. Friend that there is no present intention that the definition of alterations should be cut down in any way, but, as I said, even in that respect there are problems of definition and I think it right that we should seek the view of those professionally concerned.

Mr. Geoffrey Johnson Smith: May I take it, therefore, that the industry can expect any dubiety on this point to be cleared up in a matter of some months or less?

Mr. Rees: Unless my hon. Friend is contemplating another Finance Bill in a matter of months—I do not think that that would find much favour with the Committee—it could be done only by an extra-statutory concession. I am always a little reticent about extra-statutory concessions, but perhaps I have misunderstood what my hon. Friend had in mind.

Mr. Johnson Smith: I apologise for not making the matter clear. I was thinking that perhaps another circular could easily clear up any doubt that now exists in the industry.

Mr. Rees: I shall certainly look at that question again. If we feel that there are

grey areas or areas of difficulty, which are causing real concern, we can see whether it is possible to define them in that way, consistent, of course, with the duty of Customs and Excise to adminster a statutory code.
Finally on this point, I remind my hon. Friend and the Committee that the Department of the Environment grant-aids insulation. I believe that one can obtain £50 for loft insulation, and 200, 000 grants have been made since September 1978.
I come now to amendment No. 37, explained so eloquently, as one would expect, by my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack). My hon. Friend has built up a considerable reputation in this subject. He modestly reminded us of his connection with the Historic Churches Preservation Trust, and I look forward to receiving some informed representations from that source. My hon. Friend was modest enough not to mention that he is the author of a considerable work on this subject, and I have no doubt that there will be a stampede to the Library, if not to the bookshops, to read that work before the subject comes up again. I need hardly remind hon. Members of "Heritage in Danger".
I am in some difficulty here. The hon. Member for Liverpool, Walton (Mr. Heffer) said that the Committee was not to be seduced by bland or fair words, but I must state in general terms that this is a concern of the present Administration, as I hope it was also, to a degree, though not so observable, of the last. But there is a new flavour about opposition now, and perhaps the hon. Member for Gateshead, West will bring a fresh mind and a yet more favourable attitude to this matter. He certainly showed that he has a considerable grasp of it. Indeed, he mentioned one house which may be known to other hon. Members. We look forward to the hon. Gentleman's contributions, and I very much hope that we shall be able to establish a bipartisan approach to this important and continuing problem.
5.15 p.m.
I am sure that hon. Members noted the support from both sides for this objective. The difficulty that I feel about the amendment is that it merely isolates a problem


of VAT. Of course, I recognise the problem, but I believe—and I hope that, on reflection, my hon. Friend and the Committee will believe—that it is wrong to identify this one facet of the problem and deal with it in isolation. I suggest that it would be better—here I take up the words of the hon. Member for Gateshead. West—to evolve a broad strategy which will involve looking at more than just the question of VAT, which will involve looking at—dare I say it?—the capital transfer tax and a whole range of other taxes. Moreover, it is not just a question of taxes, not just of removing fiscal disadvantages, but of a possible need for positive advantages. I know that my right hon. Friend the Chancellor of the Duchy of Lancaster has this in mind—it overlaps his responsibilities—and we shall certainly be looking to see how far we can over the months ahead evolve such a broad strategy. I hope that, when it is produced, it will command a measure of bipartisan support.

Mr. Dalyell: It is all very well to think of messing around with the capital transfer tax, but everybody who has had experience of Finance Bills knows how difficult that is. Why should not the strategy be concentrated through the agencies, and particularly the historic buildings councils?
May I now repeat the question of which I gave the Minister's office notice, namely, what is it intended to do about the problem of those 250-year-old and 300-yearold buildings, the stone of which is suddenly crumbling? This is a problem peculiar to stone of a certain age.

Mr. Rees: There may be a difference of philosophy between the hon. Gentleman and myself on how support should be given. Perhaps there will have to be a mixture of fiscal relief and positive subvention. I suspect that at the end of the day it may be a question of balance, and perhaps the difference between us is not as fundamental as the hon. Gentleman and I might at first sight suspect.
On the more particular question—I was grateful for the notice that the hon. Gentleman gave—I should like to say that we could indeed devise a specific and positive fiscal relief for that problem in the context of this Finance Bill, but I doubt that we shall. I recognise the problem. Perhaps the Committee will permit

the personal reminiscence that I was privileged to be at a college in Oxford and I could plainly see the facade of the library crumbling and blackened because it was suffering from precisely the sort of decay and corrosion to which the hon. Gentleman has drawn attention.
I do not believe that we shall be able to evolve in the context of the present Bill a specific relief in respect of that problem, although we shall bear in mind what the hon. Gentleman has to say. I am sure that, when we look at the overall strategy, there will be an important footnote to remind us to deal with it.

Dr. Jeremy Bray: Will the Minister of State accept that this is a matter of urgency, and, in looking at it, will he examine the report by Lord Eccles, who, in the first Conservative Government after the war, accepted the principle that fiscal incentives could not deal with the problem but that grants were the only possible way of doing it?

Mr. Rees: Of course, anything that my noble Friend, with his vast experience, prepares one will read and re-read with due respect. I just would not like to commit myself to accept wholesale what he said. Nor am I entirely knocked off my perch by the hon. Gentleman's suggestion that perhaps what I am saying today is not entirely in accord with his philosophy.
As I said, I am sure that the Committee will recognise that it will take a little time to consider this matter, since it is not purely a fiscal question. I give as much as that to the hon. Gentleman. It is a subject on which we shall, I hope, be able to evolve a broad strategy, which will command bipartisan support.

Mr. Cormack: I am grateful to my hon. and learned Friend for what he said, and I entirely agree on the need to evolve a broad strategy—that is vital—but we are here concentrating our minds on VAT and there is a genuine problem. Can my hon. and learned Friend assure the Committee that he does not rule out of the broad strategy a possible zero rating of repairs to listed buildings?

Mr. Rees: If I say that I rule out nothing, I hope that my hon. Friend will not put too much weight on any specific aspect that he has in mind. He will


appreciate that the solution of a particular problem may not command universal support. He will know that the EEC sixth directive obliges us not to extend zero rating. All our countries are signatories to that. I know that there are hon. Members on the Opposition Benches—the hon. Member for Walton in particular, who courteously informed me that he could not be here for the remainder of the debate—who will say that that is an argument of no weight whatever. But right hon. and hon. Members who are burdened with ministerial office or who have been so burdened—I am sure that the right hon. Member for Llanelli will agree—recognise that these international obligations are not quite so lightly brushed aside. It may therefore be a little difficult to approach the matter by the route which my hon. Friend suggests.
Nevertheless, I hope that my hon. Friend will recognise that there is a fund of good will on the Front Benches and the Back Benches on both sides of the Committee. I am sure that, given a little time, a comprehensive, comprehensible and sympathetic strategy can be worked out. Against that background, I hope that my hon. Friend will not feel it necessary to press his amendment to a Division, whatever blandishments may be offered to him by the Opposition.
Equally, I hope that my hon. Friend the Member for East Grinstead will feel that there is sufficient understanding of the problem which he has outlined and sufficient will to find some sort of solution to it that he need not press his amendment.
As for amendment No. 20, we have yet to hear the fresh voice of the hon. Member for Gateshead, West tell us whether, in his new approach to these matters, he feels that the amendment should be forced to a Division. The hon. Gentleman will be conscious of the past of his own party while in office. He will recognise that there is a certain inconsistency in the position that he has been led to take up. He will recognise, too, that there is a certain virtue in maintaining the broad base of VAT. I hope that on that basis he will feel that justice has been done to his case and that he will not feel it necessary to divide the Commitee.

Mr. John Horam: In replying to the debate, which we began at about three o'clock this morning and which we are curtailing at a rather later hour than I expected, the Minister of State used one of the Treasury's traditional arguments and followed it with a more bizarre argument which seems to have spread along the Treasury Bench since the new team took its place.
The traditional argument is that we have a single rate of VAT and it is right that that should be broadly based. If we are all in favour of a single rate, we are all in favour of it being broadly based. That is the straightforward way to tax goods that come within the remit of the amendment.
That is a good argument, but not one that applies to a rate of 15 per cent. That is the argument that has been advanced throughout by the Opposition since the increase in VAT was announced. What is possible and sensible for a VAT rate of 10 per cent. is neither sensible nor possible when the rate is 15 per cent.
Once we move into the higher rate it is inevitable that certain problems are posed, whether they involve heritage properties or ordinary houses. Those problems are raised in an acute form. They do not occur in the same form if the VAT rate is 8 per cent. or 10 per cent. Therefore, I do not believe that the standard, traditional Treasury defence, which would have held good at a lower rate of VAT, holds good for the new higher rate. I ask Treasury Ministers to scrap that part of the brief. I hope that we shall hear no more of that argument.
The second argument that the hon. and learned Gentleman produced was most strange. He sought refuge in accusing me of introducing a new definition for repairs and maintenance. He accused me of establishing a new category of meritorious repairs. That is rather akin to his right hon. Friend the Chief Secretary seeking refuge in the remarkable idea of discretionary clothing. We have "meritorious repairs" used as a reason for the rejection of the amendment, while the discretionary clothing argument was advanced last night. I find this most bizarre. The fact that that approach has spread so fast along the Treasury Bench indicates that it is a new tactic on the part of the Treasury. In some respects


it is better than the old argument, but it still will not do.
All that the Opposition are saying is that items of repair and maintenance that were taxed at 8 per cent. and will now be taxed at 15 per cent. should continue to be subject to a rate of 8 per cent. We are not changing any definitions. We wish merely to revert to the old rate. The Treasury Bench cannot deploy the arcane argument that I have described.
I turn to the substance of the debate. I shall do so briefly. I am conscious that I dwelt overlong on these matters last night. However, there were certain pressing reasons for doing so at the time. I am glad that in the end we resolved those matters to the satisfaction of everyone. We were all glad that we were able to adjourn the debate rather than continuing it earlier this morning.
First, I address my remarks to heritage properties. I mention those properties first, but not because I think that they are most important. I was interested and rather enticed by what the Minister of State said about the desirability of an overall strategy for heritage properties and what the Treasury team might do in that regard in the ensuing months or years. I hope that those are not merely bland words. I hope that they mean something significant. That is an approach that is felt necessary by both sides of the Committee, especially by my hon. Friend the Member for West Lothian (Mr. Dalyell) and the hon. Member for Staffordshire, South-West (Mr. Cormack).
That approach is also necessary in other areas such as forestry which are important to the economy in a national sense and in a local sense. Those areas need a clear economic strategy within which is included a sensible fiscal regime. They should not be treated, as they have been countless times—and heaven knows how often right hon. and hon. Members have complained about this from the Front Bench and the Back Benches—as part of a lottery. They should not have merely to accept the consequence of overall taxation changes made for other reasons. I hope that the Treasury team means what it says.
We must continue to discuss VAT. The Treasury team has expressed what may be a desirable long-term aim that we hope

will lead to a positive achievement, but in the short term we face an increased rate of VAT for repairs and maintenance of heritage properties that we must oppose. It will mean problems such as lost jobs in various parts of the country. That is only one consequence.
My hon. Friend the Member for Don Valley (Mr. Welsh), who is not in the Chamber, spoke graphically about the impact of these measures on young couples who have applied for improvement grants and who are carrying out repairs and maintenance as part of that procedure. Their costs will be increased substantially because of the higher rate of VAT and the increase in the MLR and interest rates generally that they have faced and will have to face. My hon. Friend gave an example of a young couple incurring an additional burden of £100 in the course of improving their home, a desirable social objective with which we all agree. It is a great pity that that desirable social objective is to be put beyond the reach of many young people.
Many householders, especially after the severe winter of 1978–79, will be thinking about repairing and maintaining their homes. That will cost them more. As my hon. Friend the Member for Keighley (Mr. Cryer) said, that will apply especially in areas such as Keighley and Gateshead where there is a great deal of industrial revolution property in a bad state of repair and in constant need of repair and maintenance. Much of that property is occupied by pensioners and others of low means who can ill afford an extra –50 or whatever the sum may be that results from the proposed increase. The Government should have thought about that.
A number of Conservative Members and some of my hon. Friends, most notably my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), have spoken about the effect on the building industry. I cannot do better than to quote the press release issued by the National Federation of Building Employers when the increased rate of VAT was announced:
There are three main areas of potential growth for private sector construction demand: private housebuilding, repair/improvement maintenance work, commercial/industrial building. All three of these areas have been steadily recovering over the past 18 months or so, but this recovery will now be severely tested by the tight squeeze on the private


sector which is announced in the Budget … it must equally be recognised that the increase in minimum lending rate to 14 per cent. will … reduce the availability of funds for house purchase … increase the cost of builders' work-in-progress … decrease the incentive for capital investment in building works … the imposition of 15 per cent. VAT upon repair and maintenance work will tend to discourage householders from undertaking these works as well as encouraging the 'moonlighting' and less reputable elements in the building business, and make the administrative and commercial existence of the VAT-registered builder doubly hard.
It is the small-scale builder, so well known to the Conservative Party, who will be most hard hit by these measures. I thought that it was part of the intention

of the new style of government to encourage those in that position. In fact, this Administration is hitting them hard.

The increased rate of VAT will have a special effect on heritage properties and churches. It will affect the ordinary householder by increasing his costs. It will also have an effect on the building industry and cause a loss of jobs. For all those reasons the Opposition must press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 218, Noes 286.

Division No.41]
AYES
[5.29 p.m.


Abse, Leo
Duffy, A. E. P.
Leighton, Ronald


Adams, Allen
Dunlop, John
Lestor, Miss Joan (Eton &amp; Slough)


Allaun, Frank
Dunwoody, Mrs Gwyneth
Lewis, Ron (Carlisle)


Alton, David
Eastham, Ken
Lofthouse, Geoffrey


Anderson, Donald
Edwards, Robert (Wolv SE)
Lyon, Alexander (York)


Archer, Rt Hon Peter
Ellis, Raymond (NE Derbyshire)
Mcartney, Hugh


Armstrong, Rt Hon Ernest
Ellis, Tom (wrexham)
McDonald, Dr Oonagh


Ashton, Joe
Ennals, Rt Hon David
McElhone, Frank


Bagier, Gordon A. T.
Evans, Ioan (Aberdare)
McGuire, Michael (Ince)


Barnett, Guy (Greenwhich)
Ewing, Harry
Mckay, Allen (Penistone)


Barnett, Rt Hon Joel (Heywood)
Fitch, Alan
McKelvey, William


Beith, A. J.
Flannery, Martin
MacKenzie, Rt Hon Gregor


Benn, Rt Hon Anthony Wedgwood
Fletcher, Ted (Darlington)
Maclennan, Robert


Bidwell, Sydney
Foot, Rt Hon Michael
McMahon, Andrew


Booth, Rt Hon Albert
Ford, Ben
McMillan, Tom (Glasgow, Central)


Boothroyd, Miss Betty
Forrester, John
McNally, Thomas


Bottomley, Rt Hon Arthur (M'brough)
Foster, Derek
McWilliam, John


Bradley, Tom
Foulkes, George
Marks, Kenneth


Bray, Dr Jeremy
Freud, Clement
Marshall, David (Gl'sgow, Shettles'n)


Brown, Hugh D. (Provan)
Garrett, John (Norwich S)
Marshall, Dr Edmund (Goole)


Buchan, Norman
Garrett, W. E. (Wallsend)
Marshall, Jim (Leicester South)


Callaghan, Rt Hon J. (Cardiff SE)
George, Bruce
Michael (Gl'gow, Springb'rn)


Callaghan, Jim (Middleton &amp; P)
Golding, John
Maxton, John


Campbell, Ian
Gourlay, Harry
Maynard, Miss Joan


Campbell-Savours, Dale
Grant, John (Islington C)
Meacher, Michael


Canavan, Dennis
Grimond, Rt Hon J.
Mellish, Rt Hon Robert


Cant, R. B.
Hamilton, James (Bothwell)
Mikardo, Ian


Carmichael, Neil
Hamilton, W. W. (Central Fife)
Millan, Rt Hon Bruce


Cartwright, John
Hardy, Peter
Miller, Dr M. S. (East Kilbride)


Cocks, Rt Hon Michael (Bristol S)
Harrison, Rt Hon Walter
Mitchell, Austin (Grimsby)


Cohen, Stanley
Hattersley, Rt Hon Roy
Mitchell, R. C. (Soton, Itchen)


Coleman, Donald
Haynes, Frank
Morris, Rt Hon Alfred (Wythenshawe)


Concannon, Rt Hon J. D.
Healey, Rt Hon Denis
Morris, Rt Hon Charles (Openshaw)


Conlan, Bernard
Heffer, Eric S.
Morris, Rt Hon John (Aberavon)


Cook, Robin F.
Hogg, Norman (E Dunbartonshire)
Morton, George


Cowans, Harry
Home Robertson, John
Moyle, Rt Hon Roland


Cox, Tom (Wandsworth, Tooting)
Homewood, William
Newens, Stanley


Craigen, J. M. (Glasgow, Maryhill)
Hooley, Frank
Oakes, Rt Hon Gordon


Crowther, J. S.
Horam, John
O'Neill, Martin


Cryer, Bob
Howell, Rt Hon Denis (B'ham, Sm'H)
Orme, Rt Hon Stanley


Cunliffe, Lawrence
Huckfield, Les
Owen, Rt Hon Dr David


Cunningham, George
Hughes, Mark (Durham)
Palmer, Arthur


Dalyell, Tam
Hughes, Robert (Aberdeen North)
Park, George


Davidson, Arthur
Hughes, Roy (Newport)
Parker, John


Davies, Rt Hon Denzil (Llanelli)
Janner, Hon Greville
Parry, Robert


Davies, E. Hudson (Caerphilly)
Jay, Rt Hon Douglas
Penhaligon, David


Davies, Ifor (Gower)
John, Brynmor
Powell, Raymond (Ogmore)


Davis, Clinton (Hackney Central)
Johnson, James (Hull West)
Prescott, John


Davis, Terry (B'rm'ham, Stechford)
Jones, Rt Hon Alec (Rhondda)
Price, Christopher (Lewisham West)


Dean, Joseph (Leeds West)
Jones, Barry (East Flint)
Race, Reg


Dempsey, James
Jones, Dan (Burnley)
Radice, Giles


Dewar, Donald
Kaufman, Rt Hon Gerald
Richardson, Miss Jo


Dixon, Donald
Kerr, Russell
Roberts, Allan (Bootle)


Dobson, Frank
Kilfedder, James A.
Roberts, Ernest (Hackney North)


Dormand, Jack
Lambie, David
Robertson, George


Douglas, Dick
Lamborn, Harry
Rodgers, Rt Hon William


Douglas-Mann, Bruce
Lamond, James
Rooker, J. W.


Dubs, Alfred
Leadbitter, Ted
Ross, Ernest (Dundee West)




Ross, Stephen (Isle of Wight)
Stott, Roger
Whitehead, Phillip


Rowlands, Ted
Straw, Jack
Whitlock, William


Sandelson, Neville
Summerskill, Hon Dr Shirley
Wigley, Dafyd


Sever, John
Thomas, Dafydd (Merloneth)
Willey, Rt Hon Frederick


Sheldon, Rt Hon Robert (A'ton-u-L)
Thomas, Mike (Newcastle East)
Williams, Sir Thomas (Warrington)


Shore, Rt Hon Peter (Step and Poo)
Thomas, Dr Roger (Carmarthen)
Wilson, Gordon (Dundee East)


Silkin, Rt Hon John (Deptford)
Thorne, Stan (Preston South)
Wilson, Rt Hon Sir Harold (Huyton)


Silkin, Rt Hon S. C. (Dulwich)
Tilley, John
Wilson, William (Coventry SE)


Silverman, Julius
Urwin, Rt Hon Tom
Winnick, David


Skinner, Dennis
Varley, Rt Hon Eric G.
Wrigglesworth, Ian


Smith, Rt Hon J. (North Lanarkshire)
Walker, Rt Hon Harold (Doncaster)
Wright, Sheila


Snape, Peter
Watkins, David
Young, David (Bolton East)


Spriggs, Leslie
Weetch, Ken



Stallard, A. W.
Wellbeloved, James
TELLERS FOR THE AYES


Stewart, Rt Hon Donald (W Isles)
Welsh, Michael
Mr. Ted Graham and


Stoddart, David
White, Frank R. (Bury &amp; Radcliffe)
Mr. John Evans




NOES


Adley, Robert
Dover, Denshore
Irving, Charles (Cheltenham)


Alexander, Richard
du Cann, Rt Hon Edward
Jenkin, Rt Hon Patrick


Ancram, Michael
Dunn, Robert (Dartford)
Jessel, Toby


Arnold, Tom
Durant, Tony
Johnson Smith, Geoffrey


Aspinwall, Jack
Dykes, Hugh
Johnston, Russell (Inverness)


Atkins, Robert (Preston North)
Eden, Rt Hon Sir John
Jopling, Rt Hon Michael


Atkinson, David (B'mouth, East)
Edwards, Rt Hon N. (Pembroke)
Joseph, Rt Hon Sir Keith


Baker, Kenneth (St. Marylebone)
Egger, Timothy
Kaberry, Sir Donald


Baker, Nicholas (North Dorset)
Elliott, Sir William
Kellett-Bowman, Mrs Elaine


Banks, Robert
Eyre, Reginald
Kershaw, Anthony


Beaumont-Dark, Anthony
Fairbairn, Nicholas
King, Rt Hon Tom


Bell, Ronald
Fairgrieve, Russell
Kitson, Sir Timothy


Bendall, Vivian
Faith, Mrs Sheila
Knox, David


Bennett, Sir Frederic (Torbay)
Fell, Anthony
Lamont, Norman


Benyon, W. (Buckingham)
Fenner, Mrs Peggy
Lang, Ian


Berry, Hon Anthony
Finsberg, Geoffrey
Langford-Holt, Sir John


Best, Keith
Fisher, Sir Nigel
Lawrence, Ivan


Bevan, David Gilroy
Fletcher, Alexander (Edinburgh N)
Lawson, Nigel


Biffen, Rt Hon John
Fletcher-Cooke, Charles
Lee, John


Biggs-Davison, John
Fookes, Miss Janet
Lennox-Boyd, Hon Mark


Blaker, Peter
Forman, Nigel
Lester, Jim (Beeston)


Bonsor, Sir Nicholas
Fowler, Rt Hon Norman
Lewis, Kenneth (Rutland)


Boscawen, Hon Robert
Fox, Marcus
Lloyd, Ian (Havant &amp; Waterloo)


Bottomley, Peter (Woolwich West)
Fraser, Peter (South Angus)
Lloyd, Peter (Fareham)


Bowden, Andrew
Fry, Peter
Loveridge, John


Boyson, Dr Rhodes
Galbraith, Hon T. G. D.
Luce, Richard


Bright, Graham
Gardiner, George (Reigate)
Lyell, Nicholas


Brinton, Tim
Gardner, Edward (South Fylde)
McCandle, Robert


Britten, Leon
Garel-Jones, Tristan
Macfarlane, Neil


Brocklebank-Fowler, Christopher
Glyn, Dr Alan
MacGregor, John


Brooke, Hon Peter
Goodhart, Philip
MacKay, John (Argyll)


Brotherton, Michael
Goodlad, Alastair
Macmillan, Rt Hon M. (Farnham)


Brown, Michael (Brigg &amp; Sc'thorpe)
Gorst, John
McNair-Wilson, Michael (Newbury)


Browne, John (Winchester)
Gow, Ian
McNair-Wilson, Patrick (New Forest)


Bruce-Gardyne, John
Gower, Sir Raymond
Madel, David


Bryan, Sir Paul
Grant, Anthony (Harrow C)
Major, John


Buck, Antony
Gray, Hamish
Marland, Paul


Budgen, Nick
Grieve, Percy
Marlow, Tony


Bulmer, Esmond
Griffiths, Eldon (Bury St Edmunds)
Marshall, Michael (Arundel)


Burden, F. A.
Griffiths, Peter (Portsmouth N)
Marten, Neil (Banbury)


Butcher, John
Grist, Ian
Mates, Michael


Butler, Hon Adam
Grylls, Michael
Mather, Carol


Cadbury, Jocelyn
Gummer, John Selwyn
Maude, Rt Hon Angus


Carlisle, John (Luton West)
Hamilton, Hon Archie (Eps'm &amp; Ew'll)
Mawby, Ray


Carlisle, Kenneth (Lincoln)
Hamilton, Michael (Salisbury)
Mawhinney, Dr Brian


Carlisle, Rt Hon Mark (Runcorn)
Hampson, Dr Keith
Maxwell-Hyslop, Robin


Chalker, Mrs. Lynda
Hannam, John
Mellor, David


Channon, Paul
Haselhurst, Alan
Meyer, Sir Anthony


Chapman, Sydney
Havers, Rt Hon Sir Michael
Miller, Hal (Bromsgrove &amp; Redditch)


Churchill, W. S.
Hawksley, Warren
Mills, Peter (West Devon)


Clark, Hon Alan (Plymouth, Sutton)
Hayhoe, Barney
Monro, Hector


Clark, Dr William (Croydon South)
Heddle, John
Montgomery, Fergus


Clarke, Kenneth (Rushcliffe)
Henderson, Barry
Moore, John


Clegg, Walter
Heseltine, Rt Hon Michael
Morgan, Geraint


Cockeram, Eric
Hicks, Robert
Morris, Michael (Northampton, Sth)


Colvin, Michael
Hill, James
Morrison, Hon Charles (Devizes)


Cope, John
Hogg, Hon Douglas (Grantham)
Morrison, Hon Peter (City of Chester)


Corrie, John
Holland, Philip (Carlton)
Mudd, David


Costain, A. P.
Hooson, Tom
Murphy, Christopher


Cranborne, Viscount
Hordern, Peter
Myles, David


Critchley, Julian
Howe, Rt Hon Sir Geoffrey
Neale, Gerrard


Crouch, David
Howell, Rt Hon David (Guildford)
Neubert, Michael


Dean, Paul (North Somerset)
Howell, Ralph (North Norfolk)
Newton, Tony


Dickens, Geoffrey
Howells, Geraint
Normanton, Tom


Dorrell, Stephen
Hunt, David (Wirral)
Oppenheim, Rt Hon Mrs Sally


Douglas-Hamilton, Lord James
Hunt, John (Ravensbourne)
Osborn, John







Page, John (Harrow, West)
Shaw, Michael (Scarborough)
Townsend, Cyril D. (Sexleyheath)


Page, Rt Hon R. Graham (Crosby)
Shelton, William (Streatham)
Trippler, David


Parkinson, Cecil
Shepherd, Colin (Hereford)
Trotter, Neville


Parris, Matthew
Shepherd, Richard (Aldridge-Br'hills)
van Straubenzee, W. R.


Patten, John (Oxford)
Shersby, Michael
Viggers, Peter


Pattie, Geoffrey
Silvester, Fred
Wainwright, Richard (Colne Valley)


Pawsey, James
Sims, Roger
Wakeham, John


Percival, Sir Ian
Smith, Dudley (War. and Leam'ton)
Waldegrave, Hon William


Pollock, Alexander
Speed, Keith
Walker, Rt Hon Peter (Worcester)


Porter, George
Speller, Tony
Walker-Smith, Rt Hon Sir Derek


Price, David (Eastleigh)
Spicer, Jim (West Dorset)
Wall, Patrick


Prior, Rt Hon James
Spicer, Michael (S Worcestershire)
Waller, Gary


Proctor, K. Harvey
Sproat, Iain
Walters, Dennis


Pym, Rt Hon Francis
Squire, Robin
Ward, John


Raison, Timothy
Stainton, Keith
Watson, John


Rathbone, Tim
Stanbrook, Ivor
Wells, John (Maidstone)


Rees, Peter (Dover and Deal)
Steel, Rt Hon David
Wells, Bowen (Hert'rd &amp; Stev'nage)


Rees-Davies, W. R.
Stevens, Martin
Wheeler, John


Renton, Tim
Stewart, Ian (Hitchin)
Whitelaw, Rt Hon William


Rhodes James, Robert
Stewart, John (East Renfrewshire)
Whitney, Raymond


Rhys Williams, Sir Brandon
Stokes, John
Wickenden, Keith


Ridley, Hon Nicholas
Stradling Thomas, J.
Wilkinson, John


Ridsdale, Julian
Topsoil, Peter
Williams, Delwyn (Montgomery)


Rifkind, Malcolm
Taylor, Robert (Croydon NW)
Winterton, Nicholas


Roberts, Michael (Cardiff NW)
Tebbit, Norman
Wolfson, Mark


Roberts, Wyn (Conway)
Temple-Morris, Peter
Young, Sir George (Acton)


Rossi, Hugh
Thomas, Rt Hon Peter (Hendon S)
Younger, Rt Hon George


Rost, Peter
Thompson, Donald



Royle, Sir Anthony
Thorne, Neil (Ilford South)
TELLERS FOR THE NOES:


Sainsbury, Hon Timothy
Thornton, Malcolm
Mr. Spencer Le Marchant and


St. John-Stevas, Rt Hon Norman
Townend, John (Bridlington)
Mr. David Waddington.


Scott, Nicholas

Question accordingly negatived.

Amendment proposed, No. 21, in page 2, line 27, at end add—
(6) As from the passing of this Act subsection (1) above shall not apply to the supply of laundry services.".—[Miss Richardson.]

Question put, That the amendment be made:—

The Committee divided: Ayes 212, Noes 293.

Division No. 42.]
AYES
[5.43 p.m.


Abse, Leo
Cunningham, George (Islington S)
Graham, Ted


Adams, Alien
Dalyell, Tam
Grant, John (Islington C)


Allaun, Frank
Davidson, Arthur
Hamilton, James (Bothwell)


Anderson, Donald
Davies, Rt Hon Denzil (Llanelli)
Hamilton, W. W. (Central Fife)


Archer, Rt Hon Peter
Davies, E. Hudson (Caerphilly)
Hardy, Peter


Armstrong, Rt Hon Ernest
Davies, Ifor (Gower)
Harrison, Rt Hon Walter


Ashton, Joe
Davis, Clinton (Hackney Central)
Hattersley, Rt Hon Roy


Bagier, Gordon A. T.
Davis, Terry (B'rm'ham, Stechford)
Haynes, Frank


Barnett, Guy (Greenwich)
Dean, Joseph (Leeds West)
Healey, Rt Hon Denis


Barnett, Rt Hon Joel (Heywood)
Dempsey, James
Heffer, Eric S.


Beith, A. J.
Dewar, Donald
Hogg, Norman (E Dunbartonshire)


Benn, Ft Hon Anthony Wedgwood
Dixon, Donald
Home Robertson, John


Bidwell, Sydney
Dobson, Frank
Homewood, William


Booth, Rt Hon Albert
Dormand, Jack
Hooley, Frank


Boothroyd, Miss Betty
Douglas, Dick
Horam, John


Bottomley, Rt Hon Arthur (M'brough)
Douglas-Mann, Bruce
Howell, Rt Hon Denis (B'ham, Sm'H)


Bradley, Tom
Dubs, Alfred
Huckfield, Les


Bray, Dr Jeremy
Duffy, A. E. P.
Hughes, Mark (Durham)


Brown, Hugh D. (Provan)
Dunlop, John
Hughes, Robert (Aberdeen North)


Brown, Ronald W. (Hackney S)
Dunwoody, Mrs Gwyneth
Hughes, Roy (Newport)


Buchan, Norman
Eastham, Ken
Janner, Hon Greville


Callaghan, Rt Hon J. (Cardiff SE)
Edwards, Robert (Wolv SE)
Jay, Rt Hon Douglas


Callaghan, Jim (Middleton &amp; P)
Ellis, Raymond (NE Derbyshire)
John, Brynmor


Campbell, Ian
Ellis, Tom (Wrexham)
Johnson, James (Hull West)


Campbell-Savours, Dale
Ennals, Rt Hon David
Jones, Rt Hon Alec (Rhondda)


Canavan, Dennis
Evans, Ioan (Aberdare)
Jones, Barry (East Flint)


Cant, R. B.
Evans, John (Newton)
Jones, Dan (Burnley)


Carmichael, Neil
Ewing, Harry
Kaufman, Rt Hon Gerald


Cartwright, John
Fitch, Alan
Kerr, Russell


Cocks, Rt Hon Michael (Bristol S)
Flannery, Martin
Lambie, David


Cohen, Stanley
Fletcher, Ted (Darlington)
Lamborn, Harry


Coleman, Donald
Foot, Rt Hon Michael
Lamond, James


Concannon, Rt Hon J. D.
Ford, Ben
Leadbitter, Ted


Conlon, Bernard
Forrester, John
Leighton, Ronald


Cook, Robin F.
Foster, Derek
Lestor, Miss Joan (Eton &amp; Slough)


Cowans, Harry
Foulkes, George
Lewis, Ron (Carlisle)


Cox, Tom (Wandsworth, Tooting)
Garrett, John (Norwich S)
Lofthouse, Geoffrey


Craigen, J. M. (Glasgow, Maryhill)
Garrett, W. E. (Wallsend)
Lyon, Alexander (York)


Crowther, J. S.
George, Bruce
McCartney, Hugh


Cryer, bulb
Golding, John
McDonald, Dr Oonagh


Cunliffe Lawrence
Gourlay, Harry
McElhone, Frank




McGuire, Michael (Ince)
Orme, Rt Hon Stanley
Stott, Roger


McKay, Allen (Penistone)
Owen, Rt Hon Dr David
Summerskill, Hon Dr Shirley


Mckelvey, William
Palmer, Arthur
Thomas, Dafydd (Merioneth)


Mackenzie, Rt Hon Gregor
Park, George
Thomas, Mike (Newcastle East)


Maclennan, Robert
Parker, John
Thomas, Dr Roger (Carmarthen)


McMahon, Andrew
Parry, Robert
Thorne, Stan (Preston South)


McMillan, Tom (Glasgow, Central
Powell, Raymond (Ogmore)
Tilley, John


McNally, Thomas
Prescott, John
Orwin, Rt Hon Tom


McWilliam, John
Price, Christopher (Lewisham West)
Varley, Rt Hon Eric G.


Marks, Kenneth
Race, Rag
Walker, Rt Hon Harold (Doncaster)


Marshall, David (Gl'sgow, Shettles'n)
Richardson, Miss Jo
Watkins, David


Marshall, Dr Edmund (Goole)
Roberts, Ernest (Hackney North
Weetch, Ken


Marshall, Jim (Leicester South)
Robertson, George
Wellbeloved, James


Martin, Michael (Gl'gow, Springb'rn)
Rodgers, Rt Hon William
Welsh, Michael


Maxton, John
Rooker, J. W.
White, Frank R. (Bury &amp; Radcliffe)


Maynard, Miss Joan
Ross, Ernest (Dundee West)
Whitehead, Phillip


Meacher, Michael
Rowlands, Ted
Whitlock, William


Mellish, Rt Hon Robert
Sever, John
Wigley, Dafyd


Mikardo, Ian
Sheerman, Barry
Willey, Rt Hon Frederick


Millan, Rt Hon Bruce
Sheldon, Rt Hon Robert (A'ton-u-L)
Williams, Sir Thomas (Warrington)


Miller, Dr M. S. (East Kilbride)
Shore, Rt Hon Peter (Step and Pop)
Wilson, Gordon (Dundee East)


Mitchell, Austin (Grimsby)
Silkin, Rt Hon John (Deptford)
Wilson, Rt Hon Sir Harold (Huyton)


Mitchell, R. C. (Soton, Itchen)
Silkin, Rt Hon S. C. (Dulwich)
Wilson, William (Coventry SE)


Morris, Rt Hon Alfred (Wythenshawe)
Silverman, Julius
Winnick, David


Morris, Rt Hon Charles (Openshaw)
Skinner, Dennis
Wrigglesworth, Ian


Morris, Rt Hon John (Aberavon)
Smith, Rt Hon J. (North Lanarkshire)
Wright, Sheila


Morton, George
Snape, Peter
Young, David (Bolton East)


Moyle, Rt Hon Roland
Spriggs, Leslie



Newens, Stanley
Stallard, A. W.
TELLERS FOR THE AYES


Oakes, Rt Hon Gordon
Stewart, Rt Hon Donald (W Isles)
Mr. Jack Straw and


O' Neill, Martin
Stoddart, David
Mr. Allan Roberts.




NOES


Adley, Robert
Clark, Dr William (Croydon South)
Gower, Sir Raymond


Alexander, Richard
Clarke, Kenneth (Rushcliffe)
Grant, Anthony (Harrow C)


Alton, David
Clegg, Walter
Gray, Hamish


Ancram, Michael
Cockeram, Eric
Griffiths, Eldon (Bury St Edmunds)


Aspinwall, Jack
Cope, John
Griffiths, Peter (Portsmouth N)


Atkins, Robert (Preston North)
Ccrmack, Patrick
Grimond, Rt Hon J.


Atkinson, David (B'mouth, East)
Corrie, John
Grist, Ian


Baker, Kenneth (St. Marylebone)
Costain, A. P.
Grylls, Michael


Baker, Nicholas (North Dorset)
Cranborne, Viscount
Gummer, John Selwyn


Banks, Robert
Critchey, Julian
Hamilton, Hon Archie (Eps'm &amp; Ew'll)


Beaumont-Dark, Anthony
Crouch, David
Hamilton, Michael (Salisbury)


Bell, Ronald
Dean, Paul (North Somerset)
Hampson, Dr Keith


Bendall Vivian
Dickens, Geoffrey
Haselhurst, Alan


Bennett, Sir Frederic (Torbay)
Dorrell, Stephen
Havers, Rt Hon Sir Michael


Benyon, Thomas (Abingdon)
Douglas-Hamilton, Lord James
Hawksley Warren


Benyon, W. (Buckingham)
Dover, Denshore
Hayhoe, Barney


Best, Keith
du Cann, Rt Hon Edward
Heddle, John


Bevan, David Gilroy
Dunn, Robert (Dartford)
Henderson, Barry


Biffen, Rt Hon John
Durant, Tony
Heseltine, Rt Hon Michael


Biggs-Davison, John
Dykes, Hugh
Hicks, Robert


Blaker, Peter
Eden, Rt Hon Sir John
Hill, James


Bonsor, Sir Nicholas
Edwards, Rt Hon N. (Pembroke)
Hogg, Hon Douglas (Grantham)


Boscawen, Hon Robert
Eggar, Timothy
Holland, Philip (Carlton)


Bottomley, Peter (Woolwich West)
Eggar, Sir William
Hooson, Tom


Bowden, Andrew
Eyre, Reginald
Hordern, Peter


Boyson, Dr Rhodes
Fairbairn, Nicholas
Howe, Rt Hon Sir Geoffrey


Bright, Graham
Fairgrieve, Russell
Howell, Rt Hon David (Guildford)


Brinton, Tim
Faith, Mrs Shella
Howell, Ralph (North Norfolk)


Brittan, Leon
Fell, Anthony
Howells, Geraint


Brocklebank-Fowler, Christopher
Fenner, Mrs Peggy
Hunt, David (Wirral)


Brooke, Hon Peter
Finsberg, Geoffrey
Hunt, John (Ravensbourne)


Brotherton, Michael
Fisher, Sir Nigel
Irving, Charles (Cheltanham)


Brown, Michael (Brigg &amp; Se'thorpe)
Fletcher, Alexander (Edinburgh N)
Jenkin, Rt Hon Patrick


Browne, John (Winchester)
Fletcher-Cooke, Charles
Jessel, Toby


Bruce-Gardyne, John
Fookes, Miss Janet
Johnston, Russell (Inverness)


Bryan, Sir Paul
Forman, Nigel
Jopllng, Rt Hon Michael


Buck, Antony
Fowler, Rt Hon Norman
Joseph, Rt Hon Sir Keith


Budgen, Nick
Fox, Marcus
Kaberry, Sir Donald


Bulmer, Esmond
Fraser, Peter (South Angus)
Kellett-Bowman, Mrs Elaine


Burden, F. A.
Freud Clement
Kershaw, Anthony


Butler, Hon Adam
Fry, Peter
Kilfedder, James A.


Cadbury, Jocelyn
Galbraith, Hon T. G. D.
King, Rt Hon Tom


Carlisle, John (Luton West)
Gardiner, George (Reigate)
Kitson, Sir Timothy


Carlisle, Kenneth (Lincoln)
Gardener, Edward (South Fylde)
Knox, David


Carlisle, Rt Hon Mark (Runcorn)
Garel-Jones, Tristan
Lamont, Norman


Chalker, Mrs. Lynda
Glyn, Dr Alan
Lang, Ian


Channon, Paul
Goodhart, Philip
Langford-Holt, Sir John


Chapman, Sydney
Goodlad, Alastair
Latham, Michael


Churchill, W. S.
Gorst, John
Lawrence, Ivan


Clark, Hon Alan (Plymouth Sutton)
Gow Ian
Lawson, Nigel







Lee, John
Osborn, John
Squire, Robin


Le Merchant, Spencer
Page, John (Harrow, West)
Stainton, Keith


Lennox-Boyd, Hon Mark
Page, Rt Hon R. Graham (Crosby)
Stanbrook, Ivor


Lester, Jim (Beeston)
Parkinson, Cecil
Steel, Rt Hon David


Lewis, Kenneth (Rutland)
Parris, Matthew
Stevens, Martin


Lloyd, Ian (Havant &amp; Waterloo)
Patten, John (Oxford)
Stewart, Ian (Hitchin)


Lloyd, Peter (Fareham)
Pattie, Geoffrey
Stewart, John (East Renfrewshire)


Loveridge, John
Pawsey, James
Stokes, John


Luce, Richard
Penhaligon, David
Stradling Thomas, J.


Lyell, Nicholas
Percival, Sir Ian
Tapsell, Peter


McCrindle, Robert
Pollock, Alexander
Taylor, Robert (Croydon NW)


Macfarlane, Neil
Porter, George
Tebbit, Norman


MacGregor, John
Price, David (Eastleigh)
Temple-Morris, Peter


MacKay, John (Argyll)
Prior, Rt Hon James
Thomas, Rt Hon Peter (Hendon S)


Macmillan, Rt Hon M. (Farnham)
Proctor, K. Harvey
Thompson, Donald


McNair-Wilson, Michael (Newbury)
Pym, Rt Hon Francis
Thorne, Neil (Ilford South)


McNair-Wilson, Patrick (New Forest)
Raison, Timothy
Thornton, Malcolm


Madel, David
Rathbone, Tim
Townend, John (Bridlington)


Major, John
Rees, Peter (Dover and Deal)
Townsend. Cyril D. (Bexleyheath)


Marland, Paul
Renton, Tim
Trippier, David


Marlow, Tony
Rhodes James, Robert
Trotter, Neville


Marshall, Michael (Arundel)
Rhys Williams, Sir Brandon
van Straubenzee, W. R.


Marten, Neil (Banbury)
Ridley, Hon Nicholas
Viggers, Peter


Mates, Michael
Ridsdale, Julian
Wainwright, Richard (Colne Valley)


Mather, Carol
Rifkind, Malcolm
Wakeham, John


Maude, Rt Hon Angus
Roberts, Michael (Cardiff NW)
Waldegrave, Hon William


Mawby, Ray
Roberts, Wyn (Conway)
Wall, Patrick


Mawhinney, Dr Brian
Ross, Stephen (Isle of Wight)
Waller, Gary


Maxwell-Hyslop, Robin
Rossi, Hugh
Walters, Dennis


Mellor, David
Rost, Peter
Ward, John


Meyer, Sir Anthony
Royle, Sir Anthony
Watson, John


Miller, Hal (Bromsgrove &amp; Redditch)
Sainsbury, Hon Timothy
Wells, John (Maidstone)


Mills, Peter (West Devon)
St. John-Stevas, Rt Hon Norman
Wells, Bowen (Hert'rd &amp; Stev'nage)


Monro, Hector
Scott, Nicholas
Wheeler, John


Montgomery, Fergus
Shaw, Michael (Scarborough)
Whitelaw, Rt Hon William


Moore, John
Shelton, William (Streatham)
Whitney, Raymond


Morgan, Geraint
Shepherd, Colin (Hereford)
Wickenden, Keith


Morris, Michael (Northampton, Sth)
Shepherd, Richard (Aldridge-Br'hills)
Wilkinson, John


Morrison, Hon Charles (Devizes)
Shersby, Michael
Williams, Delwyn (Montgomery)


Morrison, Hon Peter (City of Chester)
Silvester, Fred
Winterton, Nicholas


Mudd, David
Sims, Roger
Wolfson, Mark


Murphy, Christopher
Skeet, T. H. H.
Young, Sir George (Acton)


Myles, David
Smith, Dudley (War. and Leam'ton)
Younger, Rt Hon George


Neale, Gerrard
Speed, Keith



Neubert, Michael
Speller, Tony
TELLERS FOR THE NOES:


Newton, Tony
Spicer, Jim (West Dorset)
Mr. Anthony Berry and


Normanton, Tom
Spicer, Michael (S Worcestershire)
Mr. David Waddington.


Oppenheim, Rt Hon Mrs Sally
Sproat, Iain

Question accordingly negatived.

THE CHAIRMAN, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of the debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Order No. 48 (Debate on clause or schedule standing part), That the clause, as amended, stand part of the Bill.

Mr. John Gorst: On a point of order, Mr. Weatherill. There is one point of principle which, so far as I am aware, has not been aired. I wonder whether I may have an opportunity to deploy that point very briefly.

The Chairman: The hon. Member will know that the clause has been debated for 13 hours. I think that he has had adequate time to put his point.

Question agreed to.

Clause 1, as amended, ordered to stand part of the Bill

Clause 2

HYDROCARBON OIL ETC.

Mr. David Steel: I beg to move amendment No. 7, in page 2, line 31, leave out "£0·0810" and "£0·0920" and insert "£0·0717" and "£0·0837".

The Chairman: With this it will be convenient to take amendment No. 23, in page 2, line 31, leave out '£0·0810' and insert £0·0735', and new clause 10—Vehicle Excise Duty—
'In the Vehicles (Excise) Duty Act 1971, in the fifth Schedule (both as it is applied to Great Britain by Part V of the Fourth Schedule to the Finance Act 1977 and as it is applied to Northern Ireland by Part V of the Fifth Schedule to that Act) there shall be substituted for "£50" the words "£40 as from 1st August 1979".'.

Mr. Steel: What the amendment means in plain English is that we are proposing to alter the rate of excise duty on petrol and Derv in a manner that will


index it to the rate of inflation that occurred during 1978.
By way of preface, I say that it is my party's view that the Chancellor would have been wise throughout the Budget to go for the principle of indexing these various taxes on goods and services, thus spreading the load more equitably than he has chosen to do with the arbitrary increases in VAT and in excise duty and the non-increases in other goods which he has proposed in the Budget.
However, I want to deal specifically with the case on petrol. Quite apart from the general principle of indexation, I hope to show to the Committee that the revenue which, in the Red Book, the Government forecast that they intended to raise by these increases will be greatly exceeded as a result of the increased prices at the pumps that have appeared since the Budget forecasting was done.
There has been a savage increase in the price of both petrol and derv in the last few months. In January of this year the pump price of petrol was 80p a gallon. That included excise duty of 30p and VAT of 8p. Those two taxes greatly increased as a result of the increase in the basic oil price. On the present average pump price of 110p a gallon—I appreciate that it can be more than that—the excise duty as proposed by the Government will be 36·8p. As a result of the increased pump price and the increased excise duty, the 15 per cent. rate of VAT will bring in 14·4p a gallon.
6 p.m.
The effect of our amendment would be to reduce the price per gallon by approximately 4p. In the Red Book the Government proposed to secure an increased revenue of £375 million in a full year. Even with the aid of a calculator I found it difficult to work out what the expected rise would be, and perhaps the Minister will give us the Government's accurate and authoritative forecast? The actual revenue increase, however, will be about £600 million unless our amendment is approved, in which case the increased revenue will be about £405 million. That is still in excess of the Government's forecast. Given the increase that has taken place in the price of oil since the original forecasts were made, the Government owe it to the consumer not to take

that extra slice of revenue. They should be generous and give back at least 4p a gallon.
In formulating taxation on petrol and derv the Government have several objectives. First, they have to raise revenue. The revnue on petrol and derv cannot be exempt from the general trend. That is why we argue the case for indexation.
As the Chancellor said in his Budget Statement, the Government also desire to increase people's consciousness of the need to conserve energy, and that was one reason for increasing excise duty more than other duties. There will be an increase of almost 50 per cent. in the pump price of petrol within 12 months, taking into account the statements of the OPEC countries. Against that background it cannot be said that the Government are falling down on their duty to ensure that conservation of consumption is heavily in the minds of the public. That is happening anyway. People will not rush to be spendthrift in the use of petrol and derv if they go down by 4p a gallon.
The Government have a duty to raise revenue and ensure that the needs for conservation are firmly in the public mind. They also have a duty not to raise unnecessarily the basic cost of living in areas where petrol and derv are the necessities of life. We criticised the previous Government's 5 per cent. imposition on petrol tax. Our justification for that criticism equally applies to this Government's proposals. No Government have yet accepted that the consumption of petrol and derv is a necessity in some areas although it may be classed as a luxury in others.
The Government must reassess vehicle excise duty and the duty on fuels. Until they do so it will not be possible to meet the needs of areas where the cost of petrol is a high component in the cost of travelling to work and moving goods. It is difficult for me to justify to my constituents the fact that the price of such luxuries as drink and tobacco will not be substantially increased but that the price of a necessity like petrol will be savagely increased by the Government on top of the other increases that have occurred. I do not believe that any Minister would care to defend that piece of discrimination to my constituents.
I hope that the Government will move towards the concept of regionalisation in


these taxes. There is discussion between the Chancellor and the Minister of Transport on whether to proceed with the previous Government's intention to phase out vehicle excise duty. The important question, however, is whether the Government will consider a real conservation policy by varying the excise duty if it is to be retained according to the size of vehicle or using the mechanism of petrol excise duty to vary it regionally. That is possibly less easily evaded and may be preferable. One way or the other, the Government must tackle the problem.

Mr. Dalyell: Is the right hon. Gentleman saying that through the mechanism of excise duty petrol should be cheaper in, for instance, Hawick than in Edinburgh?

Mr. Steel: At the time of the Budget two years ago the argument was that petrol was considerably cheaper in Edinburgh than in Hawick. I am not arguing that it should be cheaper in my constituency than in big cities, but in areas like Hawick where it is a necessity it is already dearer than in the cities. That situation is intolerable. It is dearer because the oil companies conduct price wars in the big city centres with massive reductions for the volume of sales and they are not able to do that in the small towns and villages. It is a crazy policy to have cheap fuel available for private cars in the big cities and expensive fuel where there is no public transport and a private car is necessary for people to get to work.

Mr. Russell Johnston: Further to the intervention by the hon. Member for West Lothian (Mr. Dalyell), is my right hon. Friend aware that there are many areas in the Highlands where petrol is 15p a gallon more expensive than in Glasgow or Edinburgh?

Mr. Steel: I am aware that my constituency is not by any means the worst hit, compared to, for instance, Caithness or the constituency of my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond). The cost of fuel is an increasingly major contributory factor to the high cost of living the more remote people are from urban areas. I repeat that the problem has not been tackled by any Government. The amendment does

not tackle it directly, but until the Government make petrol cheaper in the areas where it is a necessity and more expensive where it is a luxury, instead of its being the other way round, they cannot expect the House to vote large increases in excise duties.
That is the burden of the case that I put before the Committee.

Mr. John Bruce-Gardyne: I have heard some fairly nutty causes advocated by the Liberals over the years, especially in the economic field. They never cease to amaze me. The Liberal leader argues this nutty cause with rather more charm than the former Member for Cornwall, North, Mr. Pardoe, but that fact does not make it any less nutty. The Liberals were nuts about incomes policy, and they were nuts about indexation. Now the Liberal leader has this bee in his bonnet about regional petrol taxation. I agree with the implications of the intervention of the hon. Member for West Lothian (Mr. Dalyell). We would be landed in a pretty pickle if we followed the path of the Liberal leader, and I urge the House to resist the amendment.
The purpose of the amendment—there is no denying this—must be to stimulate consumption of a resource that the world is trying to conserve. If that is not the purpose of the amendment, it has no purpose at all.
The right hon. Member referred to the increase in VAT on spirits and tobacco as "a marginal impost". That was not the impression that I got from the debates yesterday. If the change in this amendment has any purpose at all it must be, by definition, to try to increase petrol consumption.

Mr. David Steel: indicated dissent.

Mr. Bruce-Gardyne: It is no good the right hon. Member shaking his head. There cannot be any other conceivable reason for the amendment.

Mr. A. J. Beith: Would the hon. Member explain how one of my constituents who drives with three passengers the 12 miles each way to work and back in a low petrol consumption car can possibly make any further reductions in his consumption?

Mr. Bruce-Gardyne: I was coming to that point. I agree that this is a serious


matter for those of us who represent rural constituencies where the car is often the essential means of transport. However, I do not see how we can attempt to shield the motorcar user, wherever he may live, from the effects of a period—and I believe it is only temporary—of oil shortage. The best way to return to a position of balance, or even modest surplus in supply is to allow the price mechanism to operate, and not the least part of this is the taxation taken by the Government.

Several Hon. Members: rose—

The Temporary Chairman (Sir Stephen McAdden): Order. We cannot have three hon. Members on their feet at the same time.

Mr. Bruce-Gardyne: I am just ending my remarks. I am sure that hon. Members will have their chance to make a contribution. The only purpose of the amendment is to increase the consumption of a scarce commodity. We should not be doing such a thing in this Budget. We should not deny the Government revenue and thus increase the already rather large public sector borrowing requirement. For these reasons I hope that my right hon. and hon. Friends will resist the amendment.

6.15 p.m.

Mr. Horam: In reply to the hon. Member for Knutsford (Mr. Bruce-Gardyne) I must point out that the only consequence of adding a tax increase of 10p to the petrol price would be to increase the peaks and troughs caused by market forces. The only sensible policy to pursue is to try to level out the peaks and troughs and not have them accentuated by arbitrary taxation changes.
However, I do not propose to follow the hon. Member for Knutsford and I shall address myself to amendment No. 23 and new clause 10 which are combined with the Liberal amendment No. 7. The increase in petrol taxation at this time is an unnecessary imposition. It was a decision that was reached in haste and will be repented at leisure because it will make all our problems of inflation and recession very much worse and it will cause additional difficulties for the lower paid.
Of course, from time to time we must increase petrol taxation in this way. If this must occur, it is sensible to decrease the rate of vehicle excise duty simultaneously.

I shall explain the arithmetic of my amendments. As the Committee knows, the last Government were planning to make a switch from vehicle excise duty to petrol tax. The effect of new clause 10 and amendment No. 23 is to take the first step in that direction and reduce vehicle excise duty from £50 to £40. This will cost the Government about £170 million in revenue. Therefore, amendment No. 23 increases petrol tax by just a sufficient amount to offset this revenue loss from VED. In fact, I have been rather generous to the Revenue because I have not taken account of the consequential VAT which gives the Inland Revenue slightly more than it deserves. To the ordinary consumer the increase in the petrol tax would be roughly half what is proposed. It would be reduced from 7p to 3½p. This amount springs directly from the increase in excise duty.
The main argument put forward by the hon. Member for Knutsford was that we should consider the wider issues of energy conservation, and of course that is right. It was in these terms that the Chancellor introduced this change. One cannot dissent from that. But it is right to make the change now taking account of all serious considerations? Is it right to make such a hefty increase in the middle of the second biggest rise in petrol prices in the post-war period?
Let us look at the course of petrol price increases over the past six months. At the end of last year and the beginning of this year four star petrol was obtainable at from 75p to 85p a gallon. That was a low price compared with that obtaining in most of Western Europe. Traditionally we have always had lower prices than other countries in Europe where petrol prices then ranged from £1·12 to £1·40 a gallon. Since then the price has risen steadily. It went up to 98p for four star just before the Budget, and there was another increase of 3p almost simultaneously with the Budget increase. These steep increases reflected the change in price of Middle East crudes and the premiums associated with them. At the same time, we should have been aware, from close examination of the OPEC scene, of what the result of such changes would be. As we know now, they led to increases of between 6p and 9p on four star petrol.
Therefore, without the Budget changes and the 10p increase, there was an increase in petrol prices, arising from the market forces alone, of from 75p to—at least—£1·08. That occurred over a period of less than six months. The Government have stated clearly that they consider that the increases are appropriate. They believe that the supply shortages should be left as they are and that the prices should take the strain. That aspect of their policy should be considered when we examine the changes in taxation.
In the middle of all those increases and a policy on energy that is deliberately designed to allow prices to rise and to be carried through to the consumer, the Government have increased the price of petrol by 10p per gallon. The Prime Minister was questioned about that at Question Time by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). The right hon. Lady repeated the argument that has been put forward by the Chancellor that the object is to restrain demand. However, if prices do restrain demand in the way that the Government hope, is not OPEC already doing the job for us? Why is it necessary to accentuate an already steep price rise with a further self-imposed tax increase?
The hon. Member for Knutsford said that he believed that oil prices would fall. In that case, is it not further madness to accentuate the peak of a change in prices by adding a further lop increase? Would it not be correct, to use the terms of the hon. Gentleman, to allow market forces to work their way through without the intervention of a further arbitrary increase in petrol taxation? In its own terms, the Government policy makes no sense.
I believe that the increases have flowed from the internal logic of the Budget—as has been the case with many other changes that the Committee has been discussing. The Government had to keep the public sector borrowing requirement at the level at which they wished it to remain and, at the same time, they were committed to reducing the standard rate of income tax by 3p. To bridge that almost impossible gap not only was VAT increased to 15 per cent. but the

steep increases in excise duty on petrol were necessary. That is the cause of the present problem.
The Government decided that rather than increase excise duty on cigarettes or spirits—a more logical choice, given the need to consider the budget of the ordinary person—they would, for energy conservation reasons, increase the duty on petrol. Once again, the Government have looked at the narrow taxation points and they have failed to see the overall economic context of the Budget—"Lord Barberism" gone mad, once again.
I made my maiden speech in 1970 in the debate on Lord Barber's Budget. He made the same mistake: he looked purely at the tax consequences and failed to see the overall economic context of his actions.

Mr. F. A. Burden: Was it not the Labour Government who wished to abolish the road fund tax and replace it with a tax on petrol? Would not that have resulted in a considerable increase in the price of petrol? Those in rural areas would have suffered particularly as a result of that change.

Mr. Horam: That move would have meant an increase of 20p in the price of petrol over three years. However, it would have been offset by the elimination of the vehicle excise duty of £50. I believe that the ordinary person would rather pay as he goes and buy his petrol rather than pay the lump sum of £50. That is a large impost on an ordinary person's wage. Therefore, I do not accept the hon. Member's argument.
The net effect of this maladroit move is to add to inflationary expectations, to compound the recessionary trends which beset us, and to cause additional social hardship. An increase from 75p to £1·10 in the price of petrol is sufficient to cause the retail price index to rise by more than 1 per cent.—it will be about 1·2 per cent. In addition, there is the petrol tax increase which causes a rise in the retail price index of about 1·4 per cent.
The Automobile Association calculates that the combined effect of VAT and petrol duty increases will be an addition to the cost of running the ordinary motorist's car of about £2 per week. In the


previous Parliament I was a junior Minister in the Department of Transport and I was somewhat suspicious of estimates by the AA. It tends to exaggerate the effect on the ordinary motorist, but if that estimate is halved arbitrarily that still leaves a substantial increase in the cost of living. I calculate that the increase in excise duty, leaving aside the VAT increase, will mean that the ordinary motorist will pay between 50p and £1 extra per week on the cost of running his car.
Some hon. Members have raised the problem of rural areas. That matter has been raised in the debate by the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). Rural motorists have no choice about the matter and they cannot escape the cost of petrol. That point was made strongly by the present Chancellor of the Exchequer in the Finance Bill debate of 1977. In referring to the 5p increase he said:
This is a selective tax … it is deliberately biased against those who have no option about the method by which they travel to work. It is deliberately biased against those living in rural areas. It is deliberately designed to have precisely the wrong effect on the reverse yield gap between going to work and staying at home."—[Official Report, 9 May 1977; Vol. 931, c. 937.]
I wonder what the Chancellor thinks about that matter now, when he has doubled the increase that was proposed at that time.
That describes the clear social effect of the change; and added to that will be the economic effects. I believe that the increase will deflate demand, worsen the inflationary psychology and—whatever Conservative Members may say—it will add to the pent-up pressure for wage claims. It will be yet one more matter to be quoted throughout the course of the next 12 months as justifying further wage claims. I am sure that it justifies those claims.
A further danger is that if some of the OPEC countries realise the move that has been made by the Government after they have imposed their increases, they will argue that we must believe that we can withstand further increases because we have added to their already large increases. That places us in a difficult position to argue that they should not impose further increases in the future. On all the grounds that I have mentioned,

I believe that it is a thoroughly bad move in the present economic circumstances.
I hope that the Treasury Bench will address itself to the question of how far the increase in prices will cut consumption. I hope that the Minister will comment upon that when he winds up the debate. That point is implicit in the comments about rural areas of the right hon. Member for Roxburgh, Selkirk and Peebles. The Daily Mail recently ran an article that showed that there was a 6 per cent. rise in petrol usage since last year, despite the price increases. A Department of Energy report in 1977 on energy elasticities showed that business use carries on unaffected by higher prices and that private use is little affected. The private motorist tends immediately to be more conservation-minded, but that is soon forgotten and the demand continues to grow. Therefore, the price elesticity is low.
On this occasion it may be different. We do not know. I hope that the Government will say something about that—it may be that they do not know. I believe that the measure will cause an increase in the cost of living with no or little effect on energy conservation. The Government should have examined the matter before they decided on the precipitous and large increase. A proper fiscal regime is needed for petrol and it should be based on information about the relationship between consumption and demand and supply and price. We do not yet have that from the Government.
6.30 p.m.
Therefore, I repeat the plea of my right hon. Friend the Leader of the Opposition at Question Time recently that the Government should consider the increase in the light of the course of petrol prices since it was imposed. It does not fit in with that trend, and it is clearly seen as exacerbating the problems that ordinary motorists and the country as a whole face.
If the Government will not do that, will they at least do what we also propose, which is that they look again at the level of vehicle excise duty? That would have the great advantage of allowing the increase in the price of petrol, and all the attendant possible conservation aids, to work its way through without affecting overall motoring costs. That would be


a better way of taxing the motorist, because it would tax him as he used his car, rather than putting on him one impost of £50 a year or a smaller impost three times a year. It would also help the man who did a low mileage or who had a car that was economical in the use of energy.
That point was made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop) in the 1977 debate, when he said:
I would not have objected to the increase in fuel tax if it had been a substitute for vehicle excise tax."—[Official Report, 9 May 1977; Vol. 931, c. 960.]
That is precisely what my Government were proposing. It had much to commend it for the ordinary person and for the general energy strategy. It would also mean a great simplification and would save a great deal of bureaucratic time. I should have expected that argument to commend itself to the Conservative Party, which is seeking to cut a swathe through the numbers of our civil servants.
I was rather surprised when the now Minister of Transport came out so strongly against the proposal. The papers suggested, on the basis of his initial remarks, that he would reverse our policy. Then he went full speed backwards. It seemed plain that he was reversing his initial view because he had been got at by someone in the Treasury who had seen the advantages of our proposal. I thought that the proposal had a fair amount of bipartisan support, and I was surprised that he did not understand that.
I hope that when the Minister of State replies he will tell us what are the Government's intentions for vehicle excise duty. There have been vague statements, with contradictory reports in the Press about the Government's intentions. The Minister of Transport seems to believe one thing and other members of the Government are reported is believing other things.
There are important issues at stake, and not simply the question of the future of the Driver and Vehicle Licensing Centre at Swansea. There are all the larger questions of the transition, energy costs and the effect on the ordinary motorist. Therefore, I should like to hear from the hon. and learned Gentleman when the

Government expect to announce their intentions on the duty.
Our proposal had the merit of a logical approach, which is what we are seeking here. It would have allowed energy matters to work their way through satisfactorily, without causing undue hardship, and would have allowed the Government to do the economically sensible thing, without penalising ordinary people too much. That is the job of Government. The present Government are doing exactly the reverse—putting a harsh impost on ordinary people, without there necessarily being any energy benefit, and certainly with a bad economic effect.
I hope that on these grounds the Government will reconsider their approach.

Mr. Patrick McNair-Wilson: The hon. Member for Gateshead, West (Mr. Horam) was a member of a Government that had an equally bad record in this matter. I regret that the present Government show every sign of having a bad record. I believe that we are getting the whole question of taxation on fuel wrong.
The Leader of the Liberal Party must also recall that as a result of his party's amendment to a previous Finance Bill, which brought about a reduction in the price of petrol, diesel oil became more expensive than petrol. Yet we are always told that it is with diesel oil that the internal combustion engine should be fuelled, because it is more efficient. No party comes out of this discussion smelling of roses.
I do not like the suggestion of the hon. Member for Gateshead, West that we should abolish vehicle excise duty and dump the whole cost on petrol. Why should it all be dumped on petrol? It is unfair that the motorist should always be the one who is clobbered in any such changes. I dispute the hon. Gentleman's figures suggesting that it would cost only between 50p and £1 a week for the average motorist. That would certainly be the equivalent of the £50 licence, but I believe that the figures from which he quoted are in no sense a reflection of the new prices that are having to be paid by the motorist at the pumps today.
All of us who represent rural areas know very well that motorists are committed to substantial mileages, whether


they like it or not. They would be badly hit by such a change.
During the debate on the Loyal Address I warned my right hon. and learned Friend the Chancellor of the Exchequer not to touch fuel tax, for the simple reason that the price increase would be made for him by the major oil suppliers of the Middle East. Perhaps I may declare a past interest. I know the Middle East quite well, as for some years I was a director of a company trading in the area. As Sheikh Yamani said recently, there will be pressure on the oil-supplying States in the Gulf from the new Iranian regime and its newfound friends in the Palestine Liberation Organisation to reduce supply to the West. As the supply dies down, so the prices will rise. Therefore, I do not believe that we require the Government to add additional costs, with great respect to my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne).
Is there any limit to how much the Government are prepared to add to the cost of fuel? It can be continually argued that every penny added to the price means saving some more, but I believe that the benefits claimed are totally illusory.
I once worked for a business that dealt with the cigarette industry. I think that I know something of the habits of smokers. I no longer smoke, but I know, as we all know, that the day the price goes up because of a Budget everyone says "That is the end of smoking for me." In a few weeks' time everyone is back at it again, and probably smoking even more. I predict that the rise in the price of fuel at the pumps will make no difference to the demand.

Mr. Bruce-Gardyne: My hon. Friend will be aware that there has apparently been a 6 per cent. drop in consumption at the pumps over the past four months. If that does not reflect price, what on earth does it reflect?

Mr. McNair-Wilson: That is an interesting point. I am surprised that someone as wise as my hon. Friend should be taken in by such figures. I defy anyone to compute on the basis of a price increase the drop in consumption. There has been a shortfall in delivery to the refineries, and as a result there has been a drop in consumption.
I return to my point that demand will be restricted for us by the supply. There is no need to put on artificial figures in this country. The supplying nations will restrict supply, and demand will have to be tailored to fit.
I dispute the figure of 6 per cent. given by my hon. Friend. I saw a figure of 4 per cent. in one of the evening papers yesterday. I defy the Department of Energy to explain how, as a result of increasing fuel costs, demand has been reduced.
I of course understand the philosophy behind what the Government are doing, but I believe that it is a bogus philosophy. I believe that this country and the whole of the developed world now require fuel for their general way of life on such a scale that doing what my colleagues in the Government have done can have only one ultimate result. That is to drive up prices all round. It could be argued that, if prices rise as a result of transport costs rising throughout the economy, we should be prepared to pay that price for making energy savings. This is not how we should approach energy saving. We should encourage the motor manufacturers and others to provide equipment that uses less fuel. We should not continue on both sides of the House to tackle this problem in the same old boring way.

Mr. Nick Budgen: Will my hon. Friend explain how he proposes to encourage motor manufacturers, except through the price mechanism? Has he in mind some kind of subsidy or grant?

Mr. McNair-Wilson: I thought I had explained this matter by pointing to those who have queued for petrol in the last few weeks. I make no secret of the fact that until recently I was driving a great gas-guzzling, six-cylinder motor car that held 20 gallons of petrol. It was a very fine motor car—a British motor car. It was one of the finest products of the British motor industry, namely a Jaguar. I now drive a tiny British motor car of four cylinders, with a cylinder capacity of 1,600 cc, which holds eight gallons. I can now drive round the roads of this country without the terrible fear that I will run out of fuel. That sort of consideration will determine the type of


vehicles the motor industry produces. The industry will tailor its product to the demand. The number of people wanting to drive large gas-guzzlers, except those driving business cars, will decline.
The hon. Member for Gateshead, West made a valid point. A report has shown that 70 per cent. of new motor cars are bought by businesses. The idea, supported by some of my hon. Friends and presumably by Labour Members when their party was in Government, that the private motorist will determine whether we save energy is shot to pieces by that report. The company motorist is not restricted in the same way as is the private motorist. He is not paying for petrol in the same way. He will not be so price-sensitive.
The argument is not one of energy conservation. It is whether one wants to collect more taxation in this way. If the answer is "Yes", the question arises whether one is prepared to see inflation rise by a comparable amount. This question goes to the heart of the matter, whatever subject, including the abolition of the vehicle excise licence, is discussed. The motorist has been bashed hard enough. We should leave the additional impost on motorists' essential fuel out of our discussions about energy. It will not solve the problem. It may make the problem worse.

Mr. Norman Buchan: I talked yesterday on a similar theme in relation to value added tax. I should like, however, to pick up some of the points that have been made. First, there is the curious controversy between the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) and the hon. Member for Knutsford (Mr. Bruce-Gardyne), and the astonishing situation that the right hon. Member for Roxburgh, Selkirk and Peebles displays a total conversion away from the virtue of spending taxes. The policy of the Liberal Party over the last 12 months or two years has been to shift the balance of taxation on to spending taxes.

Mr. David Steel: It still is.

Mr. Buchan: We now see the understanding that has penetrated even the Liberal Party. The Budget is so clear in

its implications and its unfairness that even that party is converted.

Mr. Steel: The hon. Gentleman knows that he is being unfair. We have stated consistently throughout the proceedings on the Bill that we believe in making the switch. We believe that it should take place in an orderly and progressive way over the years. I argued in favour of indexing this process. We are not saying that there should be no increase. Our amendment proposes to index it. We propose that the other duties should also be indexed.

Mr. Buchan: There is another reason. Liberal Members all represent rural constituencies. They understand the implications of the Budget. All we know is that this new Liberal proposal will be indexed. This will only be a start if the Government get away with the colossal increase in indirect taxes in this Budget. Who knows how much further they may advance?
6.45 p.m.
The hon. Member for Knutsford, who wrote a notorious article in The Daily Telegraph, argued that the only possible purpose of the Liberal amendment or the Labour amendment was conservation. Does this mean that his entire argument in The Daily Telegraph, which was based entirely on the virtues of indirect taxes, goes out of the window? Is he saying that the tax must be applied to conserve fuel? Is he putting that case in saying that the right hon. Member for Roxburgh, Selkirk and Peebles was arguing the opposite? It is a nonsense. We discovered from The Daily Telegraph, more so than we have discovered from the Government Front Bench, the rationale of the shift to indirect taxation and the cuts.
The first indictment of these proposals is the curious fact that they are both deflationary and inflationary. They are inflationary in adding to every single cost of the normal consumer. They will shove up the retail price index. They are deflationary because the economy will be clobbered. To bring in this double effect at a time when we are facing an oil price crisis compounds arrogance and error with stupidity. I should have thought that on this matter at least the Government would think twice.
I want to look at the inflationary objections. This is not an evenly based inflationary concept. Like the other indirect taxes, it is directed most against the poor. Those who are less well off will have to pay more. That is true whether they can afford to be motorists or not. It will add to the price of every single essential product. By definition, those on low wages have to pay a higher proportion of their income than those who are well off for what they purchase. As with the general concept of value added tax, nothing can conceal the fact—based on the tax gap to which my hon. Friend the Member for Gateshead, West referred—that this is an addition to VAT in a different way. The petrol bought by the motorist will already have been increased by the tax, so that the value added tax on top of his total costs will be greater because of the petrol tax inclusion in it.
The Government promised during the election that they would not double value added tax. They have pushed up the tax from 8 per cent. to 15 per cent. One wonders whether the petrol tax now placed on every commodity for which the motorist pays through petrol costs is not the missing 1 per cent. in pushing up the figure to 16 per cent. If the Government increased value added tax on petrol, they would now have an additional petrol tax. They may have done the impossible. They have done what the Tory Party said it would not, and could not, do.
I want to deal with the argument of choice. Choice in relation to indirect tax is, in general terms, nonsense. One remembers the argument before the Budget and during the Budget about leaving people more money in their pockets by cutting direct tax. The petrol tax and the value added tax are a direct corollary of the cut in direct tax. If the Government had slapped on a wealth tax, there would not have been the necessity for the indirect tax. It is nonsense to argue that this leaves people with more money in their pockets to exercise choice. It was shown to be a nonsense yesterday over VAT and the same is true of this indirect tax, because it is being imposed on everyone, regardless of whether he is a motorist or not.

Mr. Burden: Would not this argument apply if the Labour Party had carried out its promise to abolish the excise duty on

cars and increase the duty on petrol? Then, presumably, they would be saying to those who drove the cars "You have saved money on the excise duty; now it is up to you whether you spend it on petrol." The same argument surely applies.

Mr. Buchan: It is a very different argument. I do not particularly want to go into it, because I had serious reservations about some of the consequences of that proposal for rural areas, but the proposal was simply an attempt to establish the average motorist's expenditure and to say that, since the individual motorist paid £50 a year, tax at a certain rate would mean that he was breaking even. It was an attempt to put no additional cost on the individual average motorist: it was an attempt to charge him in a different way.
That is a different proposition from retaining the £50 excise duty—let us remember that this Government are retaining it—and slapping on a petrol tax. The question of choice is not even left to the individual. The individual motorist can exercise an individual choice, but not the producer of necessary commodities, because the petrol tax figures in the cost of his commodities through fuel costs. Far from this proposal giving more choice, the argument is an illusion and a lie. In fact, it deprives people of choice.
The Tory Government have achieved something else as well. They have already mobilised against them the female consumer through the shopping basket and the increase in food prices. They have now mobilised the male consumer against them. As was said yesterday, this is the first Government since the war who have shown a total switch in popularity within two months of inheriting office. All other Governments have had a short honeymoon period; this Government have neither had such a honeymoon nor deserved one.
By their taxation policies, the Tory Government have declared virtual war on the poor and the less well off. They have done it in the guise of incentives in direct taxation which by definition cannot apply or be effective for the vast bulk of working people. Such proposals can constitute only a post hoc punishment for working people.
This proposal is unfair and it cuts right across the economic needs of this country—at a period when, goodness knows, we have a sharp enough inflationary crisis because of the world oil situation. I wish to heaven that the Government would think again and apply intelligence, if not ideology, and that they would get back to sanity by removing this tax or accepting the amendment.

Mr. J. Enoch Powell: There were ominous signs, even before the Budget was brought in, that the Government were going to claim that an increase in the petrol duty was an application of the market principle or the price mechanism, but I must confess that I would not have thought to hear that heresy propounded in the House of Commons by of all people, the hon. Member for Knutsford (Mr. Bruce-Gardyne).
The imposition of a tax is not the application of the price mechanism. It has nothing to do with the price mechanism. It is a repressive measure, whereas essentially the price mechanism is a creative force.
There are two sides to the working of the price mechanism. When the price of an article rises relatively—that is, when its real price rises—then that, to whatever may be the degree, represses demand, but it also stimulates supply. It stimulates supply because the increase in the price confers a temporary advantage on the supplier or the producer. It creates an inducement both ways—an inducement upon the consumer to consider that form of consumption in comparison with others, but an inducement on the producer or potential producer to produce and to supply more.
There is a strong argument—it was one of the rational propositions, perhaps the only one, that came out of the Tokyo summit—for allowing petroleum to price itself at the supply-balancing-demand point in the internal market, whether or not the external market to which the internal markets eventually are referred is being rigged by OPEC or by anybody else.
If that break-even point between supply and demand at the point of consumption, which is what ultimately tells, rises far enough, no amount of restrictive practices in the Middle East or elsewhere will

prevent further sources of supply from being exploited or the existing sources of supply from flowing more freely—not to mention calling into existence and profitability alternative sources both of petroleum and of energy. That is what the market mechanism is about and that is the justification for it.
But it is not using the market mechanism, any more than riding a bicycle is riding in a coach, to pretend that, by slapping 10p tax on the price of an article, one is applying the mechanism of price and thus bringing about a new equilibrium, a beneficial equilibrium, between supply and demand—for one is not. No doubt one is repressing consumption because one is making the price higher to the consumer, but one is doing nothing whatsoever to bring into the field what ought to be the counterpart—the response on the side of production and of supply.

Mr. Robin F. Cook: I do not wish to endorse the views of the hon. Member for Knutsford (Mr. Bruce-Gardyne), as I shall make clear if I have a chance to speak, but will the right hon. Member for Down, South (Mr. Powell) relate his argument about the price increase stimulating supply to the facts of the oil situation? It is a fact that for the past five or six years, we have been consuming more oil than we have been discovering each year in new reserves. That is the result not of any price factor but simply of geological exploration failing to find as much as we consume each year. How does the right hon. Gentleman relate that fact of the oil context to the general proposition that he is advancing?

Mr. Powell: I do not happen to agree with that, because there is a certain point to which the real price can rise at which sources of supply and production of petroleum which at present are not economic become economic, and there is a certain point at which the pips begin to squeak in the repressive methods which are used, in the new world if not in the old, to control and limit the production of petroleum.
Still, what the hon. Gentleman says, be it true or false, does not meet the argument that I am putting against the equation of a tax with the working of the price mechanism. For let us suppose that in this country, at the price which


would rule without the increase in the duty, there will be a given pattern—which must tend towards the optimum pattern, things being as they are, supply being as it is—in the use, consumption and conservation of energy from petroleum and from other sources. What is the effect then of increasing that price by the addition of a tax?
The effect is that the Government, by choosing to do that, are altering the preference schedule in this country, altering the pattern of energy usage and demand, not in order to correspond with the real world but to meet a fiscal convenience.
7 p.m.
The Government are imposing upon the consumer and upon the general pattern of consumption something which is not the consequence of OPEC or of anything in the real world but which is simply the result of an arbitrary decision of Government—the decision to raise revenue in that way rather than in any other way.
It is part of the case against all specific indirect taxes that they distort consumption and production. One can be relatively indifferent to the effects of an indirect tax, if we are indifferent, as we are in the cases of alcohol and tobacco, to the distortion of consumption and production. But we cannot be indifferent to the distortion of consumption and production of one of the major sources of energy. Whatever be the future, we wish to use the economically cheapest sources of energy in what is economically the most effective way.
We prevent ourselves from doing that if we choose to put upon one source of energy a specific indirect tax. So far, therefore, from this increase in duty bringing into force any beneficial economic effect or producing any of the effects of the price mechanism, it is actually working against them. It is bound to work for less efficient use of energy and less efficient application of the petroleum which we would otherwise be willing and able to purchase and to use.
It will do nothing to speed the day—which I and the hon. Member for Knutsford expect rather sooner than other people—when shortage is followed by its inevitable sequel, glut; the day when the consequences of the price rise produce

the rebound which they always do—the overhitting effect—and we find ourselves in a state of over-supply.
Neither the one nor the other is good. But we are not averting the one or the other by increasing the tax precisely at this stage upon precisely this commodity. It is about the most uneconomic choice that the Government could have made in looking for places to obtain the revenue which they felt that they had to make good to offset remissions of taxation elsewhere.

Mr. Russell Johnston: I remember my maiden speech in November 1964. It dealt with a 6d increase in petrol tax. That was proposed by the then Labour Government and opposed fiercely by the then Conservative Opposition. A characteristic of the Conservative Party, whenever it is in opposition, is to oppose any such tax increases.
I do not intend to go into the economic theory, since that has been outlined lucidly by the right hon. Member for Down, South (Mr. Powell). I shall make a few remarks about the impact that the increase will have on my constituency, which is the largest in the United Kingdom. To propose such an increase at a time when commercial prices have risen so drastically can only worsen an already calamitous situation.
I made a quick check round the tourist offices in my constituency, as this is the middle of the tourist season. The movement of people to the Highland area from other parts of the United Kingdom is important to the sustenance of the economy in that part of the country. In Inverness, I was told that there was unmistakeable evidence that although it had proved possible to combat the rumours of a petrol shortage, the price increases had hit everybody and hotel bookings were being cancelled.
I spoke to the chairman of the Skye tourist association, Mr. George Campbell. He said that the price increases would put the tin lid on a disastrous season, since they would have a serious effect on the tourist industry. An official in Fort William said that in 10 years he had never known such a season. This had been a disastrous season, and the petrol price increases would make it worse.
There are theories and logical arguments, but that is what happens at the end of the road. The tourist season in the Highlands is short and the position is grave. The Government should consider how to alleviate that position. Instead, they are making it worse.
I speak of tourism first because this is the time of the fat. If those involved in the tourist industry do not make the fat now they will have little to live on for the rest of the year. The impact goes beyond that, however. Those who live in rural areas have been affected savagely by the commercial increases.
Hon. Members have mentioned the proposal made at the tail end of the last Government's period of office to scrap vehicle excise duty and to replace it by a 20p increase in petrol tax. In my part of the world, that was opposed by all and sundry. It was opposed by the Highlands and Islands Development Board and the regional council. All Conservatives opposed it with a unanimous cry. They said that it was disgraceful.
Since January, the price of petrol has increased by about 35p. I forwarded many letters of complaint to the Labour Government. They came under severe bombardment over the suggestion that there should be a 20p increase in the price of petrol, in spite of that increase coinciding with the abolition of the £50 in vehicle excise duty.
We have absorbed a 35p increase, of which 5p or 6p is due directly to the petrol tax. The consumption of petrol and dery is a necessity in some areas. The Government must accept that what they are doing is profoundly damaging to the rural areas.
The right hon. Member for Down, South dealt more effectively than I can with the hon. Member for Knutsford (Mr. Bruce-Gardyne). The hon. Member for Knutsford attacked my right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) on the ground that our amendment would increase consumption. It is extraordinary that an hon. Member who is noted for his defence of laissez-faire economics should defend an arbitrary increase in tax in this way.
In the last Parliament, the Conservative Party, to a man and to a woman,

supported the Liberal amendment which opposed the 5p increase in petrol tax proposed by the then Chancellor of the Exchequer. The Government are doing exactly the opposite of what they did when they were in opposition.
The price of four-star petrol has risen by 35p a gallon since January. To reduce it to 31p a gallon—which would be the effect of this amendment—would not produce an increase in consumption though it would alleviate the situation for those who had no alternative but to use petrol. The hon. Member for Knutsford could have said, with certain justification, that the amendment afforded blanket coverage to everybody and that while one of the aims of the amendment was stimulated by rural problems it did not seek to differentiate in taking account of those problems. The hon. Gentleman and the hon. Member for West Lothian (Mr. Dalyell), seemed to suggest that there was no point in trying to differentiate. Perhaps it is difficult to do so, but the Government must be pressed strongly to seek ways whereby rural communities can be compensated.
Those are rural communities where public transport is scarce and expensive and where a great many people have to rely on private transport. Both Front Benches must know that the major agency for development in the highlands, the Highlands and Islands Development Board, was actively engaged, with the relevant local authority, the Highlands regional council, in trying to work out a system for regionalising the petrol tax. They sought to effect at least some differentiation in anticipation of the change that the previous Government planned to introduce with regard to VED and a 20p increase in the petrol tax. The need for a change which would bring about that sort of compensation is now surely greater.
Though I have spoken exclusively about that part of the United Kingdom which I represent, my arguments must obviously apply to all large rural areas. We are not just dealing with tourism. We must take into account agriculture. There will be an immediate and direct effect on costs for those in the industry, including travel to work and normal travel, and these conditions will apply alongside the general level of inflation.
I find it difficult to understand why it is necessary to do this at all. If the judgment of the Government was that they required additional income, that income could have been derived from other sources less generally damaging to the community as a whole and specifically to rural communities. Conservatives always pose as defenders of rural areas with problems, but in this case they have caused hardship and damage arbitrarily. I hope that, even at this late juncture, the Government will reconsider their position.

7.15 p.m.

Mr. Keith Wickenden: I am new to this place and confess that my feelings of unreality may not be shared by all hon. Members on the Labour Benches. First of all we should look at the facts. A few weeks ago the price of four-star petrol varied between 75p and 80p a gallon. The price is now between 110p and 115p a gallon, and in some areas it may cost 120p. Of that increase, 5p or 6p will relate to the extra VAT that we are now asked to pay. My hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) said that the extra cost of 30p to 35p would result in a 6 per cent. reduction in consumption. Other hon. Members say there will be no reduction at all.
If there is no reduction in consumption it means that we have not yet reached the market price for the commodity. We should ask ourselves what is the basis of our taxation. Should it be based on what we are prepared to pay or on what we earn thereby reducing the amount of money available for more productive investment?
I, too, represent an agricultural constituency, albeit a southern one, and I live in a village that has virtually no public transport. It has no train service and no regular bus service. We can all cut our petrol usage, as, indeed, most of us have done. My hon. Friend the Member for New Forest (Mr. McNair-Wilson) told us that he had stopped using a six-cylinder vehicle and changed to a small car. We can all do that and save 5 per cent. or 6 per cent. of fuel without undue difficulty. I have done it. I have cut my fuel consumption by 40 per cent. in the last few weeks because I think it right to do so. Many others could do the same.
We have all become used to wasting petrol in an era of cheap fuel. The hon. Member for Inverness (Mr. Johnston) spoke of hotel cancellations in his constituency. I have some experience of the holiday market, though in a different area, and that experience is quite the opposite. On the Continent, where fuel costs have for a long time been considerably higher than in this country, holiday bookings are up considerably; that is in spite of fuel difficulties and other problems. I suspect that the cancellation of hotel bookings in Scotland owes much more to the inclement weather of the last few weeks than to fuel costs.
The argument that the increase in VAT will add to agricultural costs is spurious. Agriculture is a zero rated industry. Value added tax on agricultural costs is reclaimable. I do not think that it is denied that 70 per cent. of vehicles in this country are used for business, if that is so, 70 per cent. of all extra VAT incurred on fuel is also reclaimable as an input tax against one's general VAT liability.
It is a simple ideological argument whether taxation should be recovered through spending or through earning. On the Government Benches I believe that there is strong support—I believe at one time that there was strong support on the Opposition Benches—for the idea that taxation was more efficiently recovered through spending than through direct taxation of income. Costs that we are being asked to bear, as individuals, are minimal in relation to the total increase in costs that we have all had to bear during the last few weeks. We can save them very easily by merely cutting back on our consumption. I find the indignation expressed from the Labour Benches on this issue unrealistic.

Mr. Peter Hardy: I do not wish to be unkind to a relatively new hon. Member of this House, but it is all very well for the hon. Member for Dorking (Mr. Wickenden), who drives a large car, to say that we can all get a smaller vehicle and save fuel. I represent large numbers of people, many of whom already have small cars, if indeed they have cars at all. If a constituent of mine needs that car to get to work, I cannot very well urge him to walk


or to buy a horse. His garden would not be big enough to accommodate a horse, and I hope that the hon. Gentleman will not apply the logic of his approach which would eventually lead him to recommend larger gardens.
This morning, I took part in a phone-in on Radio Sheffield. My hon. Friends will be delighted to know that I discerned no favourable assesment of the present Administration whatever. On that programme, a Mr. Miles said that he had recently driven through Italy and France. He had experienced no difficulty at all in obtaining fuel. Thousands of my constituents have been having a great deal of difficulty getting fuel in Yorkshire, where we have only 85 per cent. of our normal fuel allocation. No doubt Mr. Miles would have experienced difficulty had he been driving in my constituency. But the Secretary of State for Energy and the rest of his colleagues in the Government seem to be suggesting that their energy and finance policies are designed to make it possible for us to avoid the experiences current in other countries.
In that phone-in programme, I said to Mr. Miles that I accepted his experience and description of it, and I pointed out that last week I had been in Stockholm, where there was no difficulty whatever. Moreover, petrol is cheaper there, perhaps because the Swedes have had the good fortune not to have a Conservative Government for a long time.
It is quite irresponsible and not particularly helpful for the Government Front Bench to suggest that Britain is being guided through all kinds of difficulties which everyone else is experiencing when to a very large extent the reverse is true. I do not consider that the Government are justified in assuming, as the Secretary of State for Energy did in the exchanges on Monday, that
It is not the concern of the Department of Energy to rush around controlling and intervening."—[Official Report, 2 July 1979.]
His action is intervention. Adding 5p or 6p to the price of a gallon of petrol is intervention. It is all very well for hon. Members on the Government Benches to suggest that 5p or 6p is not a great deal. The truth is that the Government's action here is an example of great insensitivity.
I turn now to the position in my constituency. Rother Valley has grown enormously in the past decade. Many private houses have been built there during the past 10 years, especially in the period 1967–73. Thousands of people came to live in my constituency, and they came there for three reasons: first, land was relatively cheap secondly rates were extremely low; thirdly, they could commute quite cheaply to the major centres of employment, to Sheffield and other areas because energy costs were low.
We have seen those initial advantages destroyed entirely. People's rates in Rother Valley have risen enormously as a result of the Conservative local government reorganisation. Their mortgage interest rates will go up enormously again as a result of the absolutely absurd policies being pursued by this Government. Now, the costs and experiences which they will face in getting to work will present them with appalling disadvantages and perhaps a great deal of distress. In fact, what the Government are doing will stoke the very fires of inflation which bring this country into great peril.
I believe that the Government's insensitivity in this matter is literally appalling. I suppose that I ought not to complain unduly about that because the political advantages and implications are significant. The people of the rural areas of England who, to a large extent, voted Conservative on 3 May are already bitterly regretting their decision. I believe that the Government will pay for it. I see Government supporters smiling at that, but they will learn the truth on the first occasion when an hon. Member on their Benches sadly departs from us and we have a by-election. I am convinced that in the by-elections which will occur even at local government level during the next few weeks in the rural areas of England, the Conservative Party will pay dearly for this appalling piece of stupidity.
If the Government were to take the long view, if they were to say that the money had to be raised in order to finance sensible alternative policies and developments to cope with the energy shortage which all the world will experience, one might see logic in it. It would be useful if the Minister could tell the Committee that the money which the Government


will raise from this dreadful imposition will be devoted to relevant and sensible purposes, applying at least a glimmer of intelligence to these matters. But thus far the only glimmer of intelligence on this subject from the Government Benches has come from the hon. Member for New Forest (Mr. McNair-Wilson), who revealed how at least some responsibility and imagination ought to be applied to this problem.
If, for example, the Government Front Bench were to say that the energy implications for British agriculture were extremely serious and we ought to begin to see a change in the character and practice of agriculture in this country because of its enormous energy input, there might be some sensible purpose for this tax. If we were to see vigorous encouragement of conservation, the insulation of buildings, the installation of flues in new buildings and so on, one could see some logic in it.
Again, if we could see some sign that public transport would be encouraged to assist rural areas, one might see some logic in what the Government were doing. The hon. Member for Dorking told us complacently that his rural area virtually lacked any public transport. I can tell him that in South Yorkshire we have seen bus ridership increase. It is the only area in Britain where it has. Only this morning I received a response on a problem which I had raised about communications, and now some of my outlying areas are to benefit from the experimental use of small vehicles. My own Labour Government were not quite as helpful to the South Yorkshire county council's transport policies as many of us would have liked, but what they did was infinitely better than anything which may be promised or interpreted as possible under the present Government.
We have, as I say, increased bus rider-ship. We have spent a great deal of public money on providing bus services to small villages which in any other part of the country would have been isolated or cut off to a far greater extent.
That public service is essential. It is good energy policy as well. If the Government were to devote some of the money which they will extract from the poor prisoners of the motor car who will have to pay, whether they like it or not, to

some of the purposes which I have outlined, we could perhaps take a somewhat different view.
It has been said that people can reduce the size of their vehicles. I could not reduce the size of the vehicle in which I often drive around my constituency, because it is a Mini. I can, of course, get into it, but I should hate to go to a smaller car than that. I do not think that it would be good either for the decency and dignity of the House or for the comfort of the Member for Rother Valley if I did.
If there were any sign of intelligence or imagination in the Government, they would be telling the House and the country that they were putting 5p or 6p on to the price of petrol so that the money could be directed to serious and important purposes. I speak of 5p or 6p, but it could be a higher figure because, as the right hon. Member for Down, South (Mr. Powell) said, it is a regression plus VAT. But if we were to have an assurance that the 5p or 6p was to be devoted entirely to developing energy saving without reducing industrial and economic efficiency, there might be some logic in it, but without that the whole position adopted by the Government is illogical.
What is worse, the Government are merely tinkering with the problem, pursuing the most lunatic energy policy that anyone looking at the matter calmly could envisage. We are falling over ourselves to consume our offshore oil at the fastest possible rate. Hon. Members on both sides are aware also that the amount of gas being flared offshore is a scandal, and under this Government there will be more flames of folly to be seen from miles distant around our coasts.
It seems to me that the situation is so serious that we ought to spend some of the money being raised at least in making sure that the gas is not frittered away in a manner which future generations will find particularly nauseating. But there is no sign of that sensible approach being adopted by the present Government.

Mr. Patrick McNair-Wilson: Nothing was done under the Labour Government.

Mr. Hardy: It is worse now than it was previously, and it will grow worse still. If some of this money were used


in an effort to avoid that waste, we might accept that the Government were not quite so black as they are painted now.

Mr. Patrick McNair-Wilson: The hon. Gentleman has raised the important matter of gas flaring. He knows that restrictions are available. Does he recall that his Government refused to enter into any deal to produce a gas-gathering pipeline in the North Sea?

Mr. Hardy: Because at that time the Government did not wish to be prey to certain unsatisfactory influences or arrangements. But the situation is now even more serious. Let me tell the hon. Gentleman why I believe that certain steps should be taken and financed with the proceeds of this tax. I recognise that we are in a minority on these Benches and we cannot force the Government not to go ahead with this absurdity, but we can at least press for certain things to be done. For example, there are many parts of the country where people depend on oil-fired central heating. It seems to me essential that they be persuaded—I do not think that they will need much persuasion—to transform the heating of their homes. I believe that a crash programme should be introduced to secure that.
I am a believer in energy conservation, and I think that my record shows it. That which I am about to say may be regarded as heresy when set against my past record. However, there are large areas of Britain where there is no gas connection and where oil central heating is fairly common. I am on record as suggesting that we should have flues and efficiently burn coal. Those systems will have to develop in the long term. In the short term it is essential that the British Gas Council, as a result of contributions from the increased tax yield, should extend the gas connection to places such as Harthill in my constituency, which is to a large extent an area of coal, oil-fired or electric heating and where the use of gas would be both economic and just. We must move in that direction.
7.30 p.m.
Possibly the use of gas should be rather more cautiously handled, but certainly we should not allow oil to be used for heating

or steam raising. If the Government were to consider the energy problem from those standpoints, the United Kingdom would he immeasurably better off. That is the right approach. It is no good tinkering with a tax that will cause great hardship and inevitably stimulate inflation. It will not lead to social ease or any political content for the present Administration.

Mr. David Penhaligon: I am pleased to take up the remarks of the hon. Member for Rother Valley (Mr. Hardy) as I think that he went to the nub of the issue—namely, the United Kingdom's fuel policy. One of the arguments in support of an increased rate of VAT is that it will encourage the saving of oil. There is a marginal element of truth in that. If we do not admit that, we are not admitting the truth. However, only about 20 gallons of oil of every 100 gallons imported into the United Kingdom are used by the motor car. In general terms I am prepared to support a fair oil conservation policy that is applied to a wide spectrum. It is clearly nonsense to select petrol, diesel and transport, which are already taxed to the hilt, as the only area in which to save fuel.
If a person wants to buy oil to heat his swimming pool, the oil will be virtually tax-free. However, if a person in my constituency, for example, wants to buy oil to get to work, to bring food into the area or to make industry function, his fuel will be taxed heavily. There is no logic in that. I should be surprised to find an hon. Member prepared to argue the logic of that approach.
Items such as plastic bags are nothing more than lumps of oil. We should consider the possibility of taxing plastic bags and other such items. We should encourage consumers to buy paper bags or, even better, to use no bags at all.
Much of the diesel fuel that is consumed is not taxed. The diesel fuel used in agriculture and in most construction work—for example, the enormous earth-movers that are such a familitar sight in my constituency—is tax-free and will not be affected by the measure hat we are discussing. The hon. Member for Dorking (Mr. Wickenden) rightly said that most of the cars on our roads are owned and run by businesses and similarly are not affected.


It may be that the hon. Gentleman exaggerated the statistics. A recent statistic indicated that 70 per cent. of new cars were purchased by businesses, not that 70 per cent. of the cars on our roads were owned by businesses. Even so, all those cars will escape any attempt by the Government to conserve fuel.
Many of us are protected. Many hon. Members buy a large car and drive to London and back twice. It is one of the few ways in which we can make money to pay the bill. The House pays me to drive from Truro to London. It pays me about £84 to do so. I do not know what it will pay me to take account of the recent increase in petrol prices. No doubt I shall receive a note from the Fees Office before long to tell me that my mileage allowance is no longer 13·9p a mile but 18p or even 20p a mile. I do not know what it will be under the new tax regime. We are all protected. It does not make any difference to hon. Members whether petrol is £1, £1·50 or £2 a gallon. Much the same goes for the entire business element in our society.
I shall support any fair and realistic attempt to conserve fuel. We must stop the general practice of being able to drive for expenses without being made to use the rail alternative when that is reasonable. It would be reasonable to tell me that I shall be allowed expenses to drive around my constituency because there is no reasonable alternative. However, it would be unreasonable to tell me that I shall be able to have £100 a time to drive from my constituency to this place.

Mr. Hardy: I have heard the hon. Gentleman talk about the mileage allowance in other debates, the implication being that hon. Members are not acting responsibly or sensibly. The hon. Gentleman owes it to the House to give it some idea of how much he claims.

Mr. Penhaligon: I admit that when I have a large car bill to pay I am tempted to drive to London. That allows me to pay the bill. I am sure that many other hon. Members do likewise. I probably drive from my constituency to London once every six weeks. I do not drive from Truro frequently, because it is a long way. If we are honest, we all know that the mileage allowance and the way in which it is calculated is one of the ludicrous ways of making up for the

many years that Members of Parliament have not been paid a reasonable and sensible salary. That is a fact.

Mr. David Stoddart: Is the hon. Gentleman aware that the mileage allowance payable to hon. Members is below the allowance recommended by the AA?

Mr. Penhaligon: That may be, but it is usually uprated to take account of petrol price increases. We are informed of the upratings by the Fees Office. The hon. Gentleman argues that the allowance is still below the allowance recommended by the AA. A spokesman has commented on the figures produced by the AA that it claims represent the cost of running a car. If its figures are correct, I fail to see how any of my constituents earning £50 or £60 a week can afford to run a motor car.

Mr. Dalyell: I cannot sit in my place and allow the hon. Gentleman's argument to go unchallenged. I have not driven to London—I am sure that many of my Scottish colleagues are in the same position—for the past year. I have always used public transport.

Mr. Penhaligon: That is clearly excellent. We should all be encouraged to do likewise by a change in the system.
Much reference has been made to the vehicle excise licence. The previous Government considered changing it. We could make a much more effective change if we retained the system but graduated it so that it took greater effect against the gas guzzler. We should introduce a system that has the effect of charging the owner of a large car that consumes a great deal of petrol a high rate of duty. We could introduce a system that allowed the owner of an economical car to pay virtually no excise duty. That would encourage the car-driving public to buy economical cars.
Once a person buys a motor car he tends to drive it in his own style. That is so whether he is an economical driver or a rash driver. If petrol increases in price he may temporarily change his style, but he will soon revert. However, if he begins by buying an economical car, that will save some fuel. Such a change in our vehicle excise licence system would do more to save fuel than abolishing the system and increasing the price of petrol.
The increase in VAT is punitive. I speak for Truro, the constituency that elected me to this place. It is a constituency with an unemployment level running at about 10 per cent. That has been the position for a considerable time. I am somewhat doubtful about the wages statistics that are produced, but they indicate that outside the Border region of Scotland Cornwall now has about the lowest average wage of any county. Increased VAT is merely rubbing salt into an existing wound.
Not one member of the Conservative Party representing a south-western constituency is present. I remember the rhetoric from those Members of Parliament when the previous Government increased the price of petrol by a few pence.
It took two or three months for the price to go down. Those Members of Parliament should explain to their south-western electorates why they were not present for this debate, although they decided to support their Whip and vote for the increase. The point at issue is the reduction in the living standards.

Mr. Heffer: The hon. Gentleman said that no Tory Members of Parliament representing south-western constituencies were present. Earlier there was an important debate on the question of housing. I did not see many members of the Liberal Party present at that time. Perhaps there were one or two. Some of them represent areas such as mine, which have serious housing problems. It is time that hon. Gentlemen stopped this chear jack nonsense and argued the proper case and refrained from producing this rubbish, of which I am becoming tired.

Mr. Penhaligon: The hon. Gentleman should remember that three Members out of 11 represent 27 or 28 per cent. of the Liberal Party members. That is a reasonable attendance.

Mr. William Clark: The fact that we are discussing a Liberal amendment and that there are three Liberal Members of Parliament present indicates that there is always a good Liberal turnout for a Liberal amendment, but when housing is being debated, or if there is any other debate, the Liberals are absent.

Mr. Stephen Ross: This is a stupid argument. There were two or three Liberal Members of Parliament present during the housing debate.

Mr. Penhaligon: I see that I have upset some hon. Gentlemen, as I usually do when I speak. The increase which we are discussing is a deliberate reduction in the living standards of people living in rural areas. Many of our poorest people live in the rural areas. Not all of rural Britain contains the rich commuting areas of our prosperous cities. There are many rural areas like my constituency and Inverness. This is a deliberate reduction by the Conservative Government of the living standards of people in areas which, with few exceptions—in the South-West I am the only exception—have been faithful to the Conservative cause.

Mr. Cook: Following the extraordinary speech of the hon. Member for Truro (Mr. Penhaligon), I must say that never in five and a half years have I driven from Edinburgh to London to attend Parliament. I would not seek to make a conservationist argument out of that. I have come by air on most occasions and, therefore, I suspect that I used more fuel than if I had come by car.
I say to the hon. Member for Truro, for whom I have a high regard, that there is a perfectly credible and defensible argument for increasing the salaries of Members of Parliament. However, it does not assist that argument nor does it assist us in defending it to the public, if we lump in with it the view that it would encourage us to stop abusing the allowances that are available to us.
I am glad to speak after the Liberal Party spokesman. I believe that the hon. Member for Truro was not present when the hon. Member for Inverness (Mr. Johnston) spoke.

Mr. Penhaligon: I was present.

7.45 p.m.

Mr. Cook: I was surprised when the hon. Member for Inverness assented to the proposition of the right hon. Member for Down, South (Mr. Powell) that there would be an oil glut after the shortage. I was not surprised that the right hon. Gentleman advanced that proposition.


However, I was amazed at the facility with which the hon. Member for Inverness assented to it.
I meet Liberal Party energy spokesmen from time to time. I suppose from their remarks that I meet them more often than the hon. Member for Inverness. I see no evidence of a coming oil glut. We do not have to look only to the future. We may look at the empirical evidence of recent history. The increase in oil prices in 1973 was every bit as traumatic as the present increase. In the five years following the increase, from 1974 to 1978, we continued to consume more oil than we discovered. The price mechanism did not solve the fundamental problem that the oil supplies were small and were getting smaller.
I agree with the right hon. Member for Down, South, who said that one effect of increasing oil prices would be that we should look for oil at the margin and that the reserves that were barely economic would become more economic. The right hon. Gentleman cannot be aware of the extent to which we are already operating at that margin. Had it not been for the increase in oil prices in 1973, the great majority of oil now coming out of the North Sea would already be uneconomic.
If we go beyond the level in which we are now drilling for North Sea oil, we shall run into not price or economic barriers but technological barriers. We shall reach the stage at which we must wonder whether the input of energy to get the oil out is not a greater penalty to the economy than the oil gained from drilling.
That is not a new argument; it has been going on for some years now.
In 1974, when we were recovering from the price increases of 1973, I heard Professor Milton Friedman speak on the radio. It was an unpleasant experience. His spirit has hovered over our debates. He was asked what should be the Western response to the 1973 hike in the oil prices. His response was that we should not become unduly worried about it because it was the effect of a cartel and, like all cartels, would prove to be an artificial, temporary influence on prices, and that eventually the market mechanism would reassert itself, the prices would fall and we would return to an oil glut.

That cartel has proved especially long-lived. I see no sign that in the next remarks that I meet them mor often more than in the past five years.
It is fortunate that we have the opportunity, especially under new clause 10, to debate the Government announcement that they were reviewing the commitment given by the previous Government to phase out vehicle excise duty. That statement was made on the last sitting day before the recess in answer to a planted question. Those Members of Parliament who have been here for any length of time are aware that when a Government announce their policy by means of a planted written question on the last day before a recess it is because there is no rational defence for it.
So it is in this case. Indeed, if we were to look for a policy pursued by the previous Government which would have been attractive to the fiscal policy of the incoming Government, we would inevitably be driven towards choosing the commitment to abolish vehicle excise duty. In theory, everybody is obliged to pay the tax. If vehicle excise duty were abolished, those who pay the tax would have the freedom to decide how much to contribute in the form of tax through the amount of petrol that they chose to consume.
There is no point in hon. Members representing rural and agricultural constituencies saying that their constituents have no freedom of choice as they must travel a fixed mileage to get to their work or to the shops. In the VAT clause debate those representing urban constituencies listened to Government supporters saying that increases in VAT and cuts in income tax would give their constituents the freedom of choice to buy clothing, furniture and cookers or such fripperies and luxuries.
There are other features in the abolition of vehicle excise duty that I should have thought were in harmony with the general policy pursued by the Chief Secretary. That measure would have removed £20 million of public expenditure at a stroke. It would have saved public manpower by allowing a reduction in the staff at the Swansea licensing centre. The Chief Secretary is in a paradoxical position. The logic of the decision to retain vehicle excise duty means that he will have to recruit additional manpower. The Civil Service unions that


represent the Swansea staff have said that additional manpower will be required to enforce the vehicle excise duty and to catch the 8 per cent. who persistently evade it.
It was not surprising that the Minister of Transport chose the last sitting day to announce that policy. The Government have rejected a change that would have been in harmony with their fiscal objectives because, as my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) said, the shift would have achieved the fiscal objectives while being progressive rather than regressive. The average motorist who drives an average car with average petrol consumption would, provided he did not travel more than 8,000 miles per year—which is a substantial allowance—benefit from the change. Only the motorist who travels further or who drives the Jaguar that belonged to the hon. Member for New Forest (Mr. McNair-Wilson) would pay more. That change of tax policy would be in harmony with the Government's general objectives, and would also be progressive.
It is not surprising that the Government rejected that alternative. It would have been out of place in a Budget that is throughout regressive rather than progressive.
Wider considerations have been raised in the debate. A number of Members have questioned whether the imposition would have a conservationist effect. I have as much interest as any other hon. Member in conservation measures. This morning I assisted in the presentation of a petition against one of the more obvious energy follies of the Government, namely their decision to press ahead with another nuclear power station in Scotland. I have also urged on many occasions a switch of investment from private transport to public transport before the fuel runs out.
However, the claim that the increase in duty will have a significant conservationist effect is nonsense. There is not the slightest support for it. In eight months, the price of four-star petrol has risen by 40p per gallon. It is nonsense to suggest that there will be any significant restraint on consumption by the addition of 7p per gallon.
Newspapers that may be thought to be sympathetic to the Goverenment, such as the Financial Times and The Spectator, have condemned the Budget package, not because they dislike its effect but because it is inappropriate to the times. Nowhere is that seen more clearly than in the decision to increase the tax on petrol at a time when petrol prices are rising faster than at any time in the past five years. The Budget bears out the prejudices and even the fantasies of Conservative Members. They are unable to adapt to the realities of the world, especially the realities of the consequences of the OPEC price rises.
The Government have introduced the duty increase because they are desperate to increase the revenue from anywhere and on anything in order to pay for the tax handouts that they are giving to those who drive the Jaguars referred to by the hon. Member for New Forest. If they had to increase tax, they should not have increased the tax on oil, which is the energy commodity whose price is rising fastest.
If we were considering which energy commodity should be taxed in order to restrain consumption, we should have to choose gas. Gas is a commodity that is not labour-intensive, and has therefore been insulated against the inflationary pressures of the past five years. Most of the extraction installations were put in before 1974 and therefore bear a historic cost which pre-dates the rates of inflation since 1974. Gas is therefore being sold at a price that is cheap, reflecting the inexpensiveness of its extraction from the North Sea, but that does not reflect the value of that commodity in a world that is increasingly running short of energy.
If the Conservative Party were to look round the energy market and introduce an impost for conservation effect, gas would be the choice rather than oil. The imbecility of the policy is clearly demonstrated when tax is added to a commodity in respect of which prices are rising fastest while the Government are leaning on the British Gas Corporation to hold down gas prices. People will switch from oil to gas, consumption of gas will rise, and our North Sea reserves will be depleted at an even faster rate.
The duty increase will not have a conservationist effect. There is no coherent conservationist strategy in Government policy. Therefore it is doubtful that the increase has been introduced for conservationist motives.
The bizarre decision last month to cut back fuel supplies to British Rail by 7 per cent. has had the inevitable corollary, at a time of increasing fuel shortages, of cutting services by 7 per cent. That decision was not taken by the Government or British Rail: it was taken by Shell and Esso, which decided that supplies to British Rail were to be reduced by 7 per cent. The Ministry of Transport says that it is not its business to intervene. The Department of Energy says that the market effect would be distorted if it intervened, that the matter should be left to the commercial judgment of Shell and Esso and that users of public transport should be left to the mercy of those commercial criteria. It is an irony that Parliament has voted powers to the Government to intervene—powers that they are choosing not to exercise.
It is just arguable that the 7 per cent. cut in fuel to British Rail could be defended on the ground that it makes a contribution to conservation. It is arguable that that reduces the extent of the erosion of Britain's oil reserves. However, the Ministry of Transport and the Department of Energy are unable to tell us whether the 7 per cent. being saved from fuel supplies to British Rail will help conservation or whether there will be a greater consumption of petrol as commuters are driven from public transport to private transport because of the reduction in public transport services. No research has been carried out on that question. That is the extent to which the Government have backed away from intervening in a critical situation at a critical moment.
Our constituents are suffering from that failure to respond. Conservative Members will suffer when they face the electorate in the months ahead. The electorate will not forgive them for neglecting their duty in a moment of crisis.

Mr. Stoddart: I am sorry that the hon. Member for Truro (Mr. Penhaligon) has left the Chamber. He popped into the Chamber, was called to speak, and

popped out without having the courtesy to listen to the hon. Member following him. That demonstrates that the hon. Member for Truro is not interested in debate. He is merely interested in making a cheapjack statement and leaving the Chamber.
If the hon. Gentleman misuses the expenses available to Members and uses his car on an inessential journey because he has a high repairs bill to pay, that is a matter for him. He speaks for himself and for nobody else in the House. The hon. Gentleman has no right to make such statements which he pretends apply to all hon. Members. I emphasise that he speaks for himself and condemns himself.
8 p.m.
Turning to the amendment, I agree with the remarks of the hon. Member for Inverness (Mr. Johnston) about the attitude of the Government. Their attitude has changed since 1977, when the Labour Government proposed, but did not follow up, an increase in fuel tax of 5p. I can well remember members of the Government, with crocodile tears in their eyes, describing the difficulties that would arise for retirement in rural constituencies.
We were told how difficult it would be for poor, low-paid farm workers to get to town to do their shopping, and how awful it would be for people living in rural areas because they would be isolated and unable to visit their families and friends. How sorry we were for them. What a picture of deprivation Government Members set before us because of the imposition of this extra 5p. The price of petrol at that time ranged between 68p and 70p.
What a change has come over the Government. During that debate these benches were full. There were so many Conservative Members who wanted to speak about the imposition of this extra 5p that they could not all be called. Where are they now? Are not their constituents still retirement pensioners who will have difficulty getting about? Are the people living in isolated communities now less likely to want to meet their friends and see their families? Why are not Conservative Members protesting at this increase of 10p in VAT? They opposed the 5p proposed by the Labour Government, so where are they now when


this increase of 10p will be on top of 22p, which is the difference between the price of petrol in 1977 and now?

Mr. Dalyell: My hon. Friend the Member for Swindon (Mr. Stoddart) asks where those Conservative Members have gone. The truth is that many of them have become Ministers of the Crown and are making the decisions.

Mr. Stoddart: I am most obliged to my hon. Friend the Member for West Lothian (Mr. Dalyell) for making that point. I had overlooked that. It is amazing what a change of heart has come over Members of the Conservative Party now that they have the power of decision. I am sure that this will be noticed by the population at large.
In view of the exorbitant price increases that have taken place, there is good reason for agreeing to this amendment. When this Budget was prepared, I am sure that the Government had no idea how high the price of petrol would go before the imposition of any further tax. They could have had no idea that the price of petrol would rise to its current level of £1·22 per gallon when they prepared the Budget.
It is incumbent upon the Government to take the new circumstances, about which they could not possible have known before Budget day, into account and back down from this increase. They have the opportunity to rescue their reputation by agreeing to the amendment. The Chief Secretary could come to the Dispatch Box and say that the Government did not realise the implications of the rising price of petrol before the Budget was prepared. He could tell us that the Government have seen what has happened, have listened to the arguments and are prepared to remit this tax.

Mr. Heffer: Or resign.

Mr. Stoddart: That would be the best possible solution, but I am afraid that that is asking too much.
The price of petrol has risen by 32p to 35p per gallon, which is an enormous increase. But it is even worse in some areas. My local newspaper, the Swindon Evening Advertiser, reported earlier this week that in Farringdon a garage was charging £1·41 per gallon. The garage

owner explained that it was not his doing. He was a small business man and he did not want to charge his customers that price. However, because the Government had refused to do anything about allocation of fuel the garage proprietor could not get supplies from his normal source, and had to buy from independent sources, making his profit margin less than it would have been. Because of the inactivity of the Government in controlling the distribution of petrol and oil, not only do people in various parts of the country have to pay exorbitant prices, but those who supply the petrol are in danger of bankruptcy. They are the very people who voted Conservative and are the very people about whom the Conservatives expressed so much concern—the small business men.

Mr. Dalyell: This is counter-productive in terms of energy saving, because many in country areas such as mine who regularly go to small garages now have to swan around covering many miles in order to find petrol.

Mr. Stoddart: Yes, indeed. It is a self-defeating exercise. As my hon. Friend the Member for West Lothian knows, in the face of that problem the Government remain quite inactive and are prepared to leave the whole matter to international oil companies. One wonders why on earth they were elected to govern.
The right hon. Member the Leader of the Liberal Party made that point a week ago. He asked why the Government were elected, if they did not expect that one of their tasks would be to ensure that essential oil supplies reached consumers on a fair basis and reached those parts of our economy which need the supplies.

Mr. Heffer: Is my hon. Friend aware that, while his constituents in rural areas are suffering, in my own constituency, which has a motor-racing circuit, two nights a week and at weekends my constituents' ears are still blasted off as a result of this motor racing? An enormous amount of fuel is used. At the same time there are people who desperately need that fuel in order to get to their jobs.

Mr. Stoddart: My hon. Friend underlines and emphasises the circumstances


that arise because of the non-intervention of the Government. By their inactivity they are allowing inessential users to take precedence.

Mr. Donald Anderson: Why is my hon. Friend the Member for Swindon (Mr. Stoddart) surprised at this? This is surely the essence of Tory rationing. It is not rationing according to need but according to ability to pay. This happens in every sphere. It is Tory rationing.

Mr. Stoddart: That is right. My hon. Friend the Member for Swansea, East (Mr. Anderson) knows that it was ever thus. Unfortunately, people at the last election had probably forgotten what the Tories were really like. Now they know. Some young people, perhaps, may be excused because they have not had to suffer under Toryism during their lifetime. Now they have got the mesage and if we had a general election tomorrow the outcome would be different.
However, the increase in fuel prices will be felt right across the economy. We were assured by the Chancellor when he introduced his Budget that only inessential things would be affected by the increase in VAT, but the increased VAT on petrol and other fuels will affect every commodity, including food, in exactly the same way as VAT on packaging will also affect food. Therefore, it is not only inessential things that will be affected, but also essential things.

Mr. Joseph Ashton: Does not my hon. Friend agree that there are secondary effects, for instance, on the value of property which has oil-fired central heating? There is not only the question of oil costs rising for the owner of the house with oil-fired central heating, but the fact that the value of the property is liable to drop by about £5,000 to £10,000 from now on because people will find that they cannot sell a property because of the shortage of oil supplies. Is not that a negation of the concept of the Tory property-owning democracy and the Tories' insistence on keeping up the value of owner-occupied houses?

Mr. Stoddart: My hon. Friends keep raising very relevant points which need to be dealt with. I hope that the Chief Secretary will deal with them. My hon.

Friend the Member for Bassetlay (Mr. Ashton) is very much on the ball. From a message which I have received while sitting in my place, I understand that there is an article in a London evening newspaper illustrating the worries that are facing people who have homes with oil-fired central heating, not only because some of them will have to face an increase in oil prices but because they simply cannot get fuel. What is more, the projections of the oil companies show that fuel will be in even shorter supply next winter. As many people who have oil-fired central heating in their homes have only limited storage capacity in their tanks, they may very well have to go cold.
My hon. Friend is absolutely right. In these circumstances, if a person wishes to buy a house but sees that it has oil-fired central heating, and if there is no possibility of converting to gas, he will not buy that house. The house may well be on the market for a very long time, and the owner may be forced into selling it for a much lower price than he had hitherto expected. That could cause grave hardship. It could prevent a person from taking a job elsewhere, for example, or from being able to retire to the area in which he wanted to retire. Therefore, that is another effect of Toryism and the failure of a Tory Government to deal with the things with which they should deal.

Mr. Peter Rost: The hon. Gentleman has made a great speech about the so-called failure of the Conservative Government to intervene in order to increase supplies of petrol and fuel oil. Will he explain why there is no shortage of fuel oil in France, Germany and other European countries? Could it possibly be because they have been prepared to pay the world price and that the previous Labour Government deliberately tried to hold down the price and Labour Members are now advocating the same policy, which will lead only to further restrictions and shortages?

Mr. Stoddart: I am obliged to the hon. Gentleman for intervening in that way. It is a further condemnation of his own Government. It was he who told us that in France and Germany there is no shortage of petrol. Those countries do not


have indigenous oil supplies. Yet here, we, under a Tory Government and with our own oil supplies, are apparently unable to meet the demand.

Mr. Ioan Evans: Will my hon. Friend underline the point that the confusion on British garage forecourts dates from 3 May, when the present Tory Government were elected? There was no shortage until the Tories were elected to office. It is their market forces that have caused it.

Mr. Stoddart: That is right. I am amazed that the hon. Member for Derbyshire, South-East (Mr. Rost) should have intervened to condemn his own Government in such a way.

8.15 p.m.

Mr. Rost: Will the hon. Gentleman make quite clear that what he is advocating is a form of rationing and the selling of oil, because we have it under the North Sea, below the world price to our home consumers? How does he think that that will solve the longer-term energy problem?

Mr. Stoddart: No, I am not advocating rationing.

Mr. Rost: What is the hon. Gentleman advocating?

Mr. Stoddart: What I am advocating is that the Government should ensure that oil supplies from our own sources are not diverted to other places, such as South Africa and the Common Market countries, at the expense of people in Britain. It is the hon. Gentleman's Government who have done that, and not the previous Labour Government. Again, therefore, for the second time, out of his own intervention, the hon. Gentleman has condemned the present Government's policy.
Another point that I wish to make is about our own motor industry. The Government have been warned throughout the passage of this Bill that the doubling of VAT is bound to have an adverse effect on our industry. It will adversely affect our textiles industry and our footwear industry, as we heard last night. But an imposition on the price of petrol helps our foreign competitors in respect of cars, because a great part of

the British small car market is supplied from abroad. Since the higher the petrol price, the smaller the car that will be in demand, so the worse our indigenous car industry will be hurt.
I conclude by referring to conservation. It is no good talking about trying to conserve scarce oil supplies merely by the price mechanism. That simply will not do. I listen to the right hon. Member for Down, South (Mr. Powell) with great respect when he speaks on economic matters and Common Market matters. He talked about a glut. He virtually said that as sure as night follows day, a shortage will be followed by a glut. I wish that I could think that he would be proved right. Perhaps, over a period, and in normal supply and demand conditions, that would happen. However, in the case of oil there is no infinite supply. The market economy can and will work to the ultimate only if there is an infinite supply.
There is no true glut if the supply is finite. Following a glut there will be a shortage until eventually oil runs out. That is why the Government should not consider controlling oil conservation solely by price but rather turn their efforts to finding alternative forms of energy. Many of these have been mentioned this afternoon.
The Government should give encouragement and financial inducement to people better to insulate their homes. They should also ensure that our public transport services have a better allocation of oil. These services should be increased and the public encouraged to use public transport. That would consequently save oil. A great effort should also be made to bring in electric traction. Let me here put in a plug not only for electrification of our railways but a return of the trolleybus, which would save a great deal of oil. The trolleybus was phased out through the lobbying of the oil companies, but it was a great vehicle, capable of dealing with stage carriage transport. I hope that the Minister will persuade his colleagues in the Department of Transport to consider these alterative methods of traction.
This amendment should be supported. I hope that there are enough Tory Back Benchers with good memories to support the amendment.

Mr. Ioan Evans: The Chancellor of the Exchequer said that this was an opportunity Budget, but it is an "Opportunity Knocks" Budget. It gives an opportunity to the profiteer—the oil companies—and the national asset stripper, when public corporations are handed over to private enterprise. It knocks the consumer. Its VAT provision knocks the housewife and these taxes are knocking the motorist.
The Government have been asked whether the increases are to raise revenue or conserve energy. There is an oil crisis, and that was discussed at the Tokyo conference. The Prime Minister went to Tokyo in an RAF transport plane. It would have been a gesture of the right hon. Lady's concern for oil conservation if she had travelled by British Airways. She would have been practising what she preached, although I believe that it is good for world leaders to get together to discuss such problems.
If Ministers are concerned about energy conservation, instead of coming to the House in Daimlers and Rolls-Royces, they should come in British Leyland Minis or other small vehicles. That would also cut down public expenditure.

Mr. Anderson: Hon. Members should come by bicycle.

Mr. Evans: On occasions, I believe that the Chancellor rides a bike, but I do not go that far. If Ministers set an example by coming in smaller cars, that would also save public expenditure. The revenue proposals are not being put forward purely to conserve energy. The Tories made great play during the election of the fact that if elected they would cut taxes.
There used to be a slogan
Put a tiger in your tank.
Motorists now realise that every time they go to a petrol station they put a 10p Tory tax in their tanks with every gallon. This tax was imposed in the same Budget as reduced the tax on higher income groups from 83p to 60p in the £. That is a 23 per cent. reduction. Yet the basic rate will be reduced by only 3p in the £.
Many people who take their cars to work have no alternative means of transport. To them a car is not a luxury. It is absolutely essential. Yet these people have an extra tax imposed upon them every time they fill up with petrol

The previous Labour Government had a strategy for moving away from the vehicle excise duty, which would have meant the removal of the annual £50 tax on each motor car and the imposition of 5p extra on each gallon of petrol. That was a move to try to conserve energy. The more one consumed, the more one paid. I see that my hon. Friend the Member for Swansea, East (Mr. Anderson) is in the Chamber, and I realise that the Driver and Vehicle Licensing Centre is in his constituency. However, I believe that those people working at the DVLC could have been absorbed in other parts of the Government service. There was a lot of sense in the previous Government's proposal.
Yet when that proposal was put forward, the Conservative Benches were full to overflowing with right hon. and hon. Members complaining that it was absolutely wrong to add 5p a gallon to the price of petrol. They said it discriminated against those living in rural areas and was a tax on old-age pensioners. That was only 5p, and it went hand in hand with the elimination of the £50 VED. At that time the price of petrol was far less than it is now.
The Government believe in market forces. Market forces have already operated externally in this case, so the Government have no need to do anything more. The way the international price of petrol has gone up has meant that consumers have had sufficient restraints upon them without a further Government imposition of additional tax. We have heard a lot about the difficulty of petrol supplies and the need to impose tax because, for the time being, there is a shortage. Now we hear Conservative Members saying that this will only be temporary and that a glut may follow the shortage. Therefore, will the 10p tax also be temporary? When the supplies equal the demand, will the Government come to the House and remove the 10p, or will this tax be a permanent feature?

Mr. Anderson: My hon. Friend should realise that this Tory tax will be as temporary as the concessions to higher income earners.

8.30 p.m.

Mr. Evans: In that case, I presume that while the Government are in office


that will be a permanent arrangement. My hon. Friend has a point.
When the Secretary of State for Energy made his statement to the House it was at a time of utter confusion in petrol stations all over the country. Some areas were completely without supplies, and many tourists found that petrol stations had closed down completely. That was because of the way that the supply of petrol was being managed. Queues were appearing everywhere. The Tories said that they would leave the matter to market forces.
I recall that at that time there was not one petrol station supplying petrol on the M4. There was one petrol station displaying a notice saying.
£2 worth of petrol only".
Two pound's worth of petrol does not get the motorist very far. In other petrol stations notices were displayed to the effect that they were selling not less than £4 worth of petrol. Nowadays, some petrol stations in London will allow the motorist to buy two or three gallons at £1·20 per gallon but, if he wishes to buy more, he will pay at a higher rate—possibly, £2 per gallon. That is the way that market forces operate.
It has been pointed out that in this country we are rapidly becoming self-sufficient with our North Sea oil and yet there is chaos in our petrol stations that is unheard of in France or Germany, both of which receive North Sea oil. There have been difficulties in Ireland, but most of the countries who receive North Sea oil have not experienced such difficulties.
What should be done to resolve the problem? The Government should become involved in it and the petrol companies should not be allowed to deal with the distribution of petrol in the way that they are with all the injury that is being caused to British motorists. The companies should not be allowed to get what they can from the market. At the moment, as far as they are concerned, anything goes.
After the chaos had developed, the Government came along and imposed the 10p extra charge on each gallon of petrol. Since that time, the problem has not been resolved in many areas. In my

constituency, the railways and other public transport services have been unable to obtain the oil that is required to allow public transport to operate. What sort of energy conservation is that when people cannot travel by public transport? They have been forced to use their motor cars by a Government who say that it is their intention to conserve energy.
Oil-fired power stations are now working to full capacity, unlike the coal-fired power stations—despite the fact that there is 300 years' supply of coal and large stocks in the country
The oil companies are taking full advantage of the lack of intention by the Government to become involved in the market forces. BP—a British-owned company with a 51 per cent. Government shareholding—is making large profits. The Government announced their intention to offer BP for sale. If BP were retained in the public sector, that at least, would mean that the benefit would be returned to the people. The extra prices that the motorist is paying at the petrol stations should not be sold out to private enterprise.
If there is to be a so-called "sale of the century" will BP, which is now owned to a large extent by the British people, give the benefit to the British people, or will it be handed over to financial speculators from various parts of the world? Would foreign investors buy it? It is essential to maintain our control of the company. It would look very bad if the Government, after their handling of the oil crisis, sold it.
With North Sea oil flowing, this country should not be experiencing the difficulties that other countries have.

Mr. Rost: Will the hon. Gentleman confirm that he is saying that the Government should intervene to allocate supplies and restrict the price—in other words, rationing and a black market?

The Temporary Chairman: I hope that the hon. Gentleman will not take up that question, but stick closely to the amendment that we are supposed to be discussing. We do not want a general debate on energy supply.

Mr. Evans: I shall of course abide by your ruling, Sir Stephen. If I had the opportunity, I would answer the question.


In preference to the present chaos I would accept rationing, but I do not think that it is necessary, because before 3 May we did not have chaos. We had a Labour Government, and supplies were flowing well to the petrol stations.
We are concerned about supplies, and we have discussed oil conservation. I cannot understand the Government's pursuing a policy of selling oil to South Africa, through the swap arrangements.

The Temporary Chairman: I am sure that the hon. Gentleman will realise that he is now straying a long way from the amendment. I hope that he will not continue to do so.

Mr. Evans: The only point I am making, Sir Stephen, is that oil from the North Sea is straying, too, and I hope that it does not stray to South Africa and Rhodesia. I hope that we shall confine it to this country.
The Government were elected on their promise to reduce taxation. Yet every time motorists buy petrol they are paying more in tax as a direct result of the Government's decisions. I hope that we shall be supported by those Conservative hon. Members who spoke so eloquently in the past of the suffering of people living in rural areas that an increase of 5p a gallon in the tax on petrol would cause. Recently we have seen an increase not of 5p or 10p but more like 15p, 20p and 25p. There is now talk of the possibility that before long the price will be £1·40 or £1·50.
When the Government have allowed petrol to reach such a high price through the operation of market forces, why do they want to impose a further 10p increase? I hope that Conservative hon. Members will be with us in the Aye Lobby. Just as some of us made representations to our Government not to impose a 5p increase, I hope that they will show the courage of the convictions they once had and help us to pass the amendment.

Mr. Alexander W. Lyon: I entered the debate with a genuine spirit of inquiry. I did not expect to learn so much about the peccadilloes of the Member for Truro (Mr. Penhaligon)—"Honourable" would be too high an appellation to apply to the gentleman. In the kind of aspersions he cast about fellow Members, I think

that he was beneath contempt. I hope that my remarks may be conveyed through the hon. Member for Colne Valley (Mr. Wainwright) to his hon. Friend, as he is not here to receive any strictures in reply to the generalised aspersions he cast on fellow hon. Members.
That kind of comment is reproduced in the newspapers and is carried now in the leader columns of The Daily Telegraph as a way of inducing in the public a sense that we should reduce our expenses, when they are given, and usually claimed, only for necessary travel and necessary costs incurred in our occupation. I am surprised that he has the Tory freedom to decide whether he will travel by car or by rail. I have only one car. To get the car to my constituency, I have to drive it there. If I use the car in the constituency in the service of my constituents, it is because I drove to the constituency to do so. If the House ever wishes to be generous enough to allow me to buy two cars, so that I can have one at each end, I shall be delighted to go by British Rail. As an hon. Member who represents a railway town, I should always wish to subscribe to British Rail. I hope that the hon. Gentleman will in future moderate the tone of his remarks in relation to fellow Members of the House.
I come back to my genuine spirit of inquiry. I hope that the Minister of State will be able to help. My questions may relate to the Department of Energy, but I feel that they fall within the general judgment concerning this tax. Most increases in taxes by the Treasury are justified and justifiable on the basis of raising revenue. That is one of the arguments for this tax. It has been put by the Chancellor of the Exchequer and by the hon. Member for Knutsford (Mr. Bruce-Gardyne), whom I see returning to our debate, as a completely separate justification in terms of reducing consumption of desperately scarce energy. I do not understand the context in which this argument is made. It is highly relevant to whether we should impose the increase at this time.
There is a shortfall in world supply, because of the Iranian situation, of 3 per cent. If reflected throughout the world, 3 per cent. would mean a small reduction in the amount of petrol that the average


motorist could put into his 10-gallon tank. We have seen since 3 May a massive reduction in supply throughout the country. In some areas, the reduction is as much as 25 per cent. to 30 per cent. That is not reflected by the shortfall of 3 per cent. If the intention of this tax is to reduce consumption to allow for the present Iranian situation, it is a sledgehammer to crack a nut.
The hon. Member for Knutsford has indicated already that the increased prices themselves, before the imposition of the tax, were actually reducing consumption within the country by 6 per cent. Why are we experiencing this degree of difficulty over supply if the overall world situation shows only a shortfall of 3 per cent? The answer cannot be as simple as the right hon. Member for Down, South (Mr. Powell) by his advocacy of the pricing policy, makes it.
The market has been engineered by the monopoly which the oil suppliers, the oil companies, possess in most of the countries in which they operate. They are not open to competition. They make their own judgments about where supplies should go. They have said that this country, which has so much indigenous fuel and so much oil of its own, will have to bear a bigger share of the brunt of the 3 per cent. reduction in oil supply than is justified by our position or by the world situation. The reason was that they were subject to some check upon their operations here. They have now made up for that by diverting oil from this country and our supplies from abroad into other markets where they can get a higher return.
8.45 p.m.
I do not see how in those circumstances the Government can say that our people should bear, in addition to those difficulties, an impost of 10p per gallon, so that their standard of living is more seriously worsened than the standard of living of some of our major competitors. Hon. Members on both sides have pointed out that throughout the Continent the problems of supply have been infinitesimal compared with the problems in this country. Yet we have indigenous oil and they do not. Why has this happened? It has happened only because the oil companies were diverting it.
I do not stray from the context of this debate if I refer to the Conoco swap with South Africa. The reason for objecting to that, quite apart from any of the merits of South Africa and the rest, is that it increases the difficulties of supply in this country and therefore is directly relevant to whether this 10p increase is necessary.
I do not understand why the Government are acting in this way. If they simply want to raise revenue, surely the worst way to do so is by means of a tax which imposes an increased burden across the board on all our people in every conceivable way. There have been references to the difficulties of driving in the countryside, but adding more duty to petrol means that one is bound to increase the cost of living across the board, because transport costs overall are bound to increase.
Therefore, the Government must, from a sense of concern for future inflation, have wished, if they could, to raise the revenue in another way. Some of the alternatives have been described today—taxes on wines and spirits, gambling and many other areas. It could have been done, if that was their real desire. They must at that stage have thought that it was necessary to put on this 10p to meet the shortfall from Iran and reduce consumption here at home.
I hope that I have said enough to show that I am not convinced that that shortfall was necessarily so damaging to our economy as the manoeuvres of the oil companies. If the Government were to deal with those manoeuvres they would not need this impost at all. That was their judgment at the time that the Budget was decided four or five weeks ago, but since then there has been this major increase in the oil price, dictated by the last OPEC meeting.
I recognise that that was foreshadowed to some degree by the spot prices which were being paid, but the OPEC decision meant that there was bound to be an increase in any case, having some effect, whatever effect price does have, on demand, and certainly more than the 10p increase imposed by the Budget.
This is not the usual form of bashing away at the Government on issues on


which the Opposition when in government used to advance the same arguments. This is a sensible argument about a specific situation in which there is a limitation on supply overall to the world and perhaps more markedly in this country because of the actions of the oil companies and the question of how to meet them.
If there is any difficulty, it is being met by the more recent increase of OPEC. Therefore, we do not require this impost, which will make things even worse for the Government and—more particularly and more my concern—for the living standards of ordinary workers.
In due course the increase will be passed on in the coming round of wage claims. That will cause a boost to inflation, which will be spurred by the 10p impost. In a genuine spirit of inquiry I urge the Minister of State to consider whether it is necessary to put on this impost when he could raise the same revenue in some other way.

Mr. Dalyell: Much has been said about the country areas. All those hon. Members who represent such areas know that the immediate problem is the shortage of supplies to the small garages. There is a feeling that the small garages have no future and that oil company policy is to put them out of business.
This matter was referred to by my hon. Friends the Members for Edinburgh, Central (Mr. Cook) and for York (Mr. Lyon). The basic issue is whether we should leave distribution problems to the oil companies.

Mr. Patrick McNair-Wilson: indicated assent.

Mr. Dalyell: The hon. Member for New Forest (Mr. McNair-Wilson) nods in agreement. He also represents a country area and knows what the issue is. Is it the Government's intention to leave distribution to the commercial judgment of the oil companies, or are many small garages to have no future? I warn the Government that if small garages in country areas go out of business many people will spend petrol swanning around trying to find petrol, and will obtain it in ways that are more costly to them and more costly to the economy.
This is the consequence of a laissez faire attitude. I do not care which

Department is involved. I am talking of the Government as a whole. I hope that the Government are not going to wash their hands of the problem and allow Shell, Esso and BP to ignore all but commercial interests. Many of us have written letters to Dr. Pearce, of Esso, about this matter.
Whatever the rate of VAT or petrol tax, it is no excuse for the scale of distribution of petrol in rural areas. My hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) represents an area that is even more rural than mine. He knows that unless the problem is settled and the Minister gives an answer that indicates that the Government feel that they are responsible and that they are not going to walk by on the other side of the road like a biblical Levite, the rural areas will experience grave problems.

Mr. Patrick McNair-Wilson: In sight of where I live in my constituency is the largest oil refinery in Britain—the Esso refinery at Fawley. The small garage that I normally use is an Esso garage. It is now closed from 10 am on Saturday until Monday. Its supplies have been cut drastically.
The reason for that is that when the price-cutting war took place about a year ago small garages were unable to cut their prices on the dramatic scale of some of the largest garages. Esso, like other major companies, is using the amount of petrol sold by garages a year ago to calculate supplies today. Small garages that were unable to make the colossal, across-the-board cuts to attract customers a year ago are now allocated petrol on the basis of what they sold 18 months or two years ago. Therefore, in answer to the hon. Gentleman's point, the Government ought to have further discussions with Esso Petroleum and all the other major companies to make sure that the situation created by price cutting by the major outlets is not now used to starve rural garages of petrol.

Mr. Dalyell: The hon. Gentleman pays me a compliment of saying that I should have discussions with Esso. This problem is so serious that it is not up to individuals, or groups of Back-Bench Labour Members, to have discussions. This is a clear obligation on Government Ministers. I thought that in that long and


absolutely worthwhile intervention the hon. Member for New Forest made precisely that point. Here is the problem, and the Government are washing their hands of it.
I will give way if the Minister of State wishes to comment at this stage, but I ask him a direct question. Do the Government feel that they have a responsibility in this matter, which has been raised by my hon. Friends the Members for Edinburgh, Central and for York, by the hon. Member for New Forest and by others? I get no answer now, but as the Minister of State has always been a model of courtesy in debate I hope that he will deal with this matter when he replies and has had the opportunity of talking with his officials.

Mr. Ken Eastham: This has been an interesting debate which, from time to time, has strayed from the issue of the shortage of fuel. A case has been presented for the introduction of these vicious new taxes that are designed to act as a deterrent and minimise the problem. We need oil for a variety of purposes and one readily accepts that it is a scarce resource. However, the punitive measures introduced by the Government cannot be justified. When the OPEC countries decide to fix higher prices for their products who can blame them when Governments, unconnected with the production of oil, suddenly introduce vicious increases in prices to consumers? The OPEC countries ask why they should not increase their prices when they see that people can obviously afford to pay those prices.
If we really want to control the consumption of this valuable resource there is nothing wrong with rationing. I believe that it is morally unjustifiable for people to chase around in Rolls-Royce cars which probably consume the same amount of petrol as five Minis. Petrol is now being rationed by the purse and only poorer people will be affected. That is unjustified.
We sometimes raise our hands in horror at the price being charged by Middle Eastern countries for their oil. At the same time we read in newspapers about the rip-off profits of the oil companies. Now we have the Government introducing vicious and unnecessary

taxes which add to the burdens of poorer people. Great suffering is felt at the moment by people who have to use oil for heating their homes. We must face up to the problem. If we were really concerned we ought to be in the business of conservation and the search for alternative ways of helping people with heating problems.
The situation is grossly unfair that, where there is no mains gas supply, people must use oil and pay heating bills which are twice as high as those paid by people round the corner who are able to use gas. If the Government really wanted to help to reduce oil imports and oil consumption, they could introduce some subsidies. I see nothing wrong in that. There could be subsidies so that gas mains could be laid, thereby reducing the consumption of oil.
All these factors ought to be faced, because it is unfair that one person should be able to heat his home for half the cost that people nearby pay simply because of the fluke that there is no alternative provision in his area.

9 p.m.

Mr. Anderson: My hon. Friend will recognise that there will be a particularly adverse effect on low-income households, since if they wish to transfer from oil central heating to, say, gas central heating, they must meet not only the cost of bringing the gas from the main—which may be £500 or £600, depending on the number of neighbours who would wish to do the same—but also the cost of converting their appliance. The burden on an individual low-income household may be such as to have an adverse effect on the family's health because they cannot afford to heat the home properly.

Mr. Eastham: I am grateful to my hon. Friend for raising that matter, because it precisely illustrates the problem. I have received substantial representations from constituents making a plea for gas mains to be put in so that they could avoid their present punitive heating costs. I do not regard that as unreasonable.
People using gas or electricity may from time to time receive various subsidies or assistance. People can use what is called the white meter and pay for electricity on a reduced tariff if it is taken at a certain time. It is not unfair or unreasonable for people now suffering


grievously under this imposition to ask why they, too, should not be subsidised.
The Government ought to face this problem and do something about it. Not only would they be helping the nation and reducing imports but they would at the same time help to reduce pollution, which is another matter coming to the forefront of people's minds. All these matters could be considered if the Government really intended to do what should be done.
The Government have no moral justification for an increase of this kind—a vicious increase of 10p which will make the poor in particular suffer. The person going about in a Rolls-Royce will not suffer. He can easily pay. If the price of petrol were trebled, he could still pay. It is the workers, the underdogs, who will be the ones to suffer.
As my hon. Friends have said, there is still time for the Government to relent. They could have a fresh look at the matter. If they had anything good in them, they would see this as one clause on which they could give way. Only two months ago, in the election campaign, one of the big arguments was about the cost of living. If this is not a typical illustration of an unnecessary and punitive increase, I do not know what is.
I hope that even today, before we go into the Division Lobbies, the Government will have a change of heart, recognise that there is no need to introduce this further tax, and agree tonight that it shall not be done.

Mr. Anderson: The Minister of State is an honest man. He looks up a little startled at that, but I say it in the hope that, when he replies to the debate, he will put his hand on his heart and lay bare to the Committee the Government's motive in proposing this tax. Is the primary motive energy conservation, in which case certain consequences flow, or is it a concern to spread the area from which revenue is to be gathered for the various tax cuts which the Government regard as merited? I hope that the Minister of State will lay bare that matter in due course.
It is clear that a substantial increase of duty will increase transport costs for the private motorist and for business. It will have a sharp effect on the cost of

living and hence on inflation. It will have an indirect effect in raising transport costs and increasing the costs of private motoring, which is a sensitive consideration in the minds of trade union bargainers when they submit their wage claims. That is one factor that exercises their minds considerably. As we approach the new wage round that begins in August, that will be one of the fundamental considerations in the minds of those who negotiate on behalf of trade union members. It is one of the parts of the Budget, among many others, that will serve only to fuel inflation.
Part of the increase in motoring costs is outside the Government's control, just as the fourfold increase agreed by OPEC in 1973–74 was outside the control of the then national Government and the oil consumers. Equally, the recent agreement reached by the OPEC countries could not be avoided by the United Kingdom. However, the proposed increase of duty is very much within the control of the Government. It is an extra impost decided by the Government, for whatever reasons. It is a Tory tax.
We have been reminded by several hon. Members of the cries of "Shame" and the scenes of hysteria from the Conservative Opposition when about two years ago the Labour Government submitted their relatively modest proposal, by Tory terms, of increasing the tax on petrol by about 5p. There were sad stories of the effect that that would have on commuters and on low-income earners in rural areas. Such a head of steam was raised by the opposition parties that the Government were forced to withdraw their proposal.
Where are those protesting hon. Members now? Where are those who only two years ago were so eloquent and so passionate in their appeals on behalf of rural dwellers?

Mr. Dalyell: Most of them have become Ministers of the Crown.

Mr. Anderson: If they have become Ministers of the Crown, I can only say "Shame on them" Shame on them for their inconsistency. Shame on them for the way in which they and other Conservative Members have posed as the motorist's friends. We can easily imagine the sort of campaign that they would have waged had the Labour Party


implemented its modest proposals two years ago. Would we not have seen and heard on petrol station forecourts throughout the country the suggestion that the extra 5p or 7p was a Labour tax? I do not anticipate that when the extra 10p a gallon over and above the cost of the OPEC decision takes effect we shall see or hear that suggestion on the forecourts. If inconsistency is a political virtue, there is little virtue among those who were so eloquent only two years ago on behalf of rural dwellers and who forced, quite properly in many ways, a rethink on the part of the Labour Government.
At the time when Conservative Members were so passionate in arguing against an increase in the price of petrol, the cost was substantially less than it is now following the OPEC increases. The Conservatives are not the motorist's friends as they have posed over such a long period.

Mr. Wickenden: Does the hon. Gentleman accept that the difference between now and the period to which he refers is that now there is to be a reduction in direct taxation? The previous Government, which he supported, proposed to increase the tax on petrol without any reduction in direct taxation. That is the difference.

Mr. Anderson: Yes. But I must ask this. For whom will the greatest benefit flow from the reduction?
In his Budget speech the Chancellor of the Exchequer was careful to choose his figures illustrating the benefits flowing from those tax cuts. For example, he said that the person earning £100 a week would gain about 70p, taking into account the VAT and petrol increases but excluding the other matters that would directly or indirectly force up the cost of living.
Only a small group of the population will benefit from the cuts in direct taxation—certainly not those low income earners who rely on their motor vehicles. They will carry the burden of the 10p increase, yet they will reap no benefit from the direct tax cuts. That is the reality. If the hon. Gentleman disagrees, let him say so now.
The Government explored ways of raising revenue that would benefit the

higher income earners. Their strategy is based on the fallacy that we must give incentives to that group because, somehow, investment and greater productivity will result. The gap between the high paid and low paid will be widened as a result of the reductions in direct taxation. There will be greater disatisfaction and bitterness in industrial and social relations.
Before drawing up his Budget, the Chancellor cast about for areas in which revenue could be raised. He thought that petrol tax would be a good candidate. However, while he drew up his Budget the price of petrol was going up, in any event, as a result of the decisions taken by OPEC. The Government did not have sufficient flexibility to adjust their policies to the fact that the price of petrol was going up and they added the increased burden of 10p per gallon on the motorist.
If the object were not merely to raise revenue but to conserve energy, we could seek other areas in respect of which the Government were taking energy conservation seriously. For example, why could not the Government have increased the home insulation grant or given greater encouragement in other ways? Why did the Government allow the petrol companies to reduce their supplies to British Rail at a time when, in view of the increase in motoring costs, it is in the national interest to encourage the use of public transport? Although the Government could not go as far as the Government of Sweden in reducing the cost of rail travel by half, why could they not take an initiative to encourage people to use British Rail, rather than threaten to withdraw the railway subsidy, and introduce additional ways of encouraging conservation?
One looks in vain in the Budget—or any other decisions taken by the Government—for evidence that they take conservation seriously. If the Minister or any of his right hon. and hon. Friends can point out any such evidence, I should welcome it.
9.15 p.m.
My hon. Friends have pointed out that the Government are not only increasing the cost to the motorist as a result of the extra 10p, but are now apparently


considering a further impost of an additional 20p as a result of their reconsideration of the proposal to phase out vehicle excise duty. That is contained in new clause No. 10 which we are now considering.
The case for and against phasing out VED and putting an additional sum on to the price of petrol has been debated over the last few years. The Labour Government considered it. They came to the conclusion at the end of last year that, on balance, it was probably justifiable. There are respectable arguments in favour of phasing out VED. The major argument put forward against the Labour Government's proposal was that to phase out VED and increase the tax on petrol would penalise the consumer at a time of petrol scarcity.
Now, of course, the consumer is already penalised. In terms of the real burden on the motorist, the circumstances are different, compared with last year when the Labour Government made their proposal.
Another respectable argument is that, at one stroke, the phasing out of VED would avoid the substantial evasion of VED which at present costs the Exchquer a great deal of money. If there were to be an attack on the evasion of VED, it would also mean employing more civil servants at a time when it was against Government policy.
There are other arguments for phasing out VED, but I shall not go through them all. They can be seen in the Labour Government's paper of last year. An increase in the price of petrol to compensate the phasing out of VED would affect the motor vehicle industry. We do not produce as many popular lower-powered vehicles as our competitors and, as the cost of petrol rises, more and more motorists will be inclined to buy smaller vehicles. The Department of Industry—the sponsoring Department—and the Treasury felt that this would have a substantially adverse effect on our balance of payments because of the increase in motor vehicle imports. That will now come about, in any event, as the increased price of petrol takes effect.
Only this week we have heard of the extent to which our own domestic motor industry depends on company purchase & An astonishing 70 per cent. of domestic

car purchases in the United Kingdom are made through company accounts. That shows the extent to which the perks system has developed. It is doubtful whether salary is as important to middle management as it is thought. Other areas alongside the salary, such as the company car and the subsidised mortgage, are much more attractive. One looks in vain in the Budget for any realisation by the Government of the extent to which the perks system has developed in British industry. There is no attempt in the Budget to deal with this. I fear that the Government will draw back from any attempt to deal with this problem seriously.
Now we are told that on VED the Government may execute their first II-turn. Immediately after the election we were told by the Minister of Transport—the right hon. Member for Sutton Cold-field (Mr. Fowler)—that there was no real chance of the Government's going ahead with the previous Labour Government's plans to phase out VED. Then there was a planted question and a written answer on the very eve of the recess. Finally, there was the announcement by the Chancellor during his Budget speech that in spite of the earlier announcement it was unlikely that the Government would abolish VED and that this was now back under consideration.
As many hon. Members know, I have a particular constituency interest in this matter. The Driver and Vehicle Licensing Centre is in my constituency. It employs—and employs well—a substantial number of my constituents. I hope that when the Government come to review this whole matter, as they appear to be doing—and I notice the rapt interest of my right hon. Friend the Member for Llanelli (Mr. Davies)—they will bear in mind the substantial social costs of abolishing VED in an area of high unemployment. If the Government were to go ahead with the abolition, over the next three or four years, as VED was phased out, there would be 800 fewer job opportunities in that area.
Already young people in my area who have been interviewed for Civil Service jobs have been told that those jobs no longer exist because of the Government's ban on Civil Service recruitment. Together with the uncertainties over the steel


industry and the effect of the minimum lending rate and the strong pound on the export possibilities of local companies, this means that there is an even more vital interest in the western South Wales area in the outcome of the Government's reconsideration of the future of VED.
As the Government debate this matter, I trust that they will bear in mind the vital social effects of any abolition, the remarks made by the present Secretary of State for Wales when he was shadowing my right hon. and learned Friend the Member for Aberavon (Mr. Morris)—to the effect that he hoped that my right hon. and learned Friend would fight hard in the Cabinet against the abolition of VED—and the effects on rural areas, which the Conservatives claim to espouse.
I look forward to the Minister of State's answers to some of the questions that I raised at the start of this all-to-brief intervention.

Mr. John Maxton: I should like to return to the statistic that shows that 70 per cent. of motorists in Britain are having their motoring costs paid for them by their companies or other organisations. This is one of the key statistics in the philosophy of the Budget, particularly in relation to the increase in VAT and other taxes on petrol.
What this means is that, like so much of the rest of the Budget, it is a class thing. Of course, the 70 per cent. of motorists who have their petrol paid for by companies or other organisations come in the main, although not entirely, from the ranks of the better off. The 30 per cent. are usually in the lower income bracket, and they not only pay for their petrol but have to buy their cars. It is a class matter, because these people are ordinary working men and not the executive class. It benefits the well off to the detriment of the poor.
It is with reluctance that I take on the gurus of laissez faire—the hon. Member for Knutsford (Mr. Bruce-Gardyne) and the right hon. Member for Down, South (Mr. Powell)—but the existence of the 70 per cent. who do not buy their own petrol makes nonsense of the argument that the price mechanism has a direct effect on supply and demand. That 70 per cent. is not concerned with the price of petrol.
The impact on supply and demand is indirect. The increased price paid by that 70 per cent. is passed on to the consumer through the company that provides the car. That in turn affects inflation. Inflation is not caused just by the increased cost in the transportation of goods but through this perk that is given to many in our society.
The consumer will want increased wages to pay the increased prices. If there is no wage increase, the consumer cannot purchase the commodity and the manufacturer or supplier will be selling fewer goods. The supply of petrol will not necessarily be cut. It is more likely that jobs will be cut and unemployment increase.

Mr. Allan Stewart: Is the hon. Gentleman essentially arguing that every British firm that gives its executives a company car is a monopoly?

Mr. Maxton: I am not arguing that, but there will be a comeback on companies from the increased cost in petrol. It will impact, not on the amount of petrol consumed, but on other areas of that company's operations and ultimately on the economy.
The 70 per cent. will not reduce their consumption. They are not paying for their petrol and are not worried about the price. The private motorist who has to pay for his own petrol will bear the brunt of the increased tax.
It makes a nonsense of the Government's attempt to increase the differentials between those in work and the unemployed. Consider the case of the working man who is not very well paid but can afford to buy that old banger for travelling to work. This man does not earn much more than an unemployed man and suddenly he finds that to get to work he must afford a lot more money—either on public transport or on his own car. Therefore, in real terms the differential between the working man and the unemployed man has been reduced by this Budget.
9.30 p.m.
The Budget also hits the man who pays for his own petrol and who, once again, can just about afford to run his car for weekend trips with his children. Those outings are one of his basic pleasures.


This Government have hit that pleasure, just as they have hit other simple pleasures of working people—the packet of crisps for the children, the bottle of orange squash, the chocolate biscuits. Conservative Members may laugh, but these small innocent pleasures of the lowly paid are being hit by 15 per cent. VAT. The working man can no longer afford to take his kids out into the country on Sunday afternoon because he cannot afford the petrol prices.

Mr. Burden: Is the hon. Member suggesting that the present price of petrol is entirely due to the taxes of this Government? That is the implication of his last remark.

Mr. Maxton: Of course I am not saying that, but this Government have increased petrol prices to a greater extent than was necessary. At a time when petrol prices are going up anyway the Government have imposed a tax on top, and that is intolerable. Also, the rise in petrol prices outside of taxation has been made worse by the Government's refusal to allow the Price Commission to consider the increases.
I turn to the impact of these increases. We have heard a great deal about the impact on rural areas and I agree with a great deal that has been said. However, I am particularly concerned about some of the islands which surround our coastline. I holiday on an island that is only 40 miles from the centre of Glasgow—it is not a remote area in the middle of the Atlantic. That island could become rapidly depopulated as a result of the Budget. First, the cost of running the ferry across the short stretch of water will inrease as fuel costs increase.

Mr. Wickenden: The hon. Member is referring to marine fuel, which is my business. This is zero rated. Therefore, there will not be any increases.

Mr. Maxton: I accept that. However, every tanker load of petrol going across to the island is already paying large ferry dues. Already petrol costs on the island are 10p to 15p higher than those on the mainland. Tourists will not go there because they are not guaranteed petrol supplies. Garages on the island will find it difficult to survive. Among the islanders themselves, the small farmers running their tractors, and the contractors

running their lorries will find fuel costs so much higher that they will not be able to compete. The depopulation that has already been one of the great sins of these islands over the past 100 years will continue and it will accelerate. There will be immense problems in rural areas—many of which are represented by Conservative Members.
I wonder if the hon. Member for Bute and North Ayrshire (Mr. Corrie)—in whose constituency is the island to which I have referred—will comment upon the matter. Such islands will be in great social distress as a result of the increase in VAT across the board and the increase on petrol. I urge the Committee to support the amendment to reduce taxation on petrol.

Mr. Frank Haynes: I shall make a brief speech because I realise that the Government Front Bench is becoming uneasy about the time.
In my constituency, before the election Conservatives were saying that it was time for change. There was a change in Ash-field. The constituents got rid of the sitting Member of Parliament and elected me. However, the tragedy is that a Conservative Government were elected for Great Britain. Now the people are seeing the results of broken promises.
In the election campaign the Conservatives did not mention the level of 15 per cent. for VAT. My right hon. Friend the Member for Leeds, East (Mr. Healey) pointed out at that time that if a Conservative Government were elected there would be a great increase in VAT. By God, he was right! We have a Government who are cruel to the people. Many people can ill afford these increases. I shall hazard a guess that the Conservative Government will be the Government in power when the price of a gallon of petrol reaches £2. I do not believe that I am far out in that estimate, considering the present trend.
I represent people who find it difficult to live—they are struggling. They are dependent upon the county council and the district council. I refer to the elderly and the mentally handicapped. I foresee that the Nottingham county council will have to cut back on its meals on wheels service and the transport services that it provides for the mentally handicapped.


People will be hit twice by the Government—first, by the increase in petrol and, at the same time, by the massive cutback in the rate support grant to the county council. I believe that the people will rise up eventually and say that they no longer want the Conservative Government. Some people are already saying it.
Many people were conned in the election. They have not really woken up yet, but they will wake up, and wake up with a jolt, and then the Conservatives will get one or two surprises from some of those who they think support them.
Allowing those who run petrol stations to charge what they like is a matter that has been mentioned time and again in the debate. They can charge what they like, and the Government do not do a damned thing about it. On television one night it was suggested by an Esso director, or somebody else who knew all about the matter, that prices would be £1·16 or £1·18, but we also saw on the television that people were sticking the price of £1·29 on the pumps.
As I said, the Government are doing nothing about it. They are taking away the opportunity to do something by their proposal to remove the Price Commission, which could have held prices steady in the interests of the people, particularly the working class and the poorly paid.
Conservative hon Members are grinning. They will not have many grins on their faces soon. With increasing petrol prices pushing up other prices to unacceptable levels the Government will have the trade unions saying "We want to be compensated for this." Some of us know what is going on over earnings. I shall have something to say when we debate the proposed increased in hon. Members' salaries. For now, I am talking about those outside and how they are affected by the massive increase in the cost of petrol. The Government have not helped with the extra 10p that they have themselves imposed.
There will be a reaction from the workers, asking for compensation. It will not be long before Conservative Back Benchers are pushing for a U-turn and a freeze. It has happened before, and it will happen again. It is the same

old story. We went through it all before with previous Conservative Governments.
It was a tragic day when, on 3 May, the people did not return a Labour Government to give them the opportunity to see what a Labour Government could really do on behalf of the people. Conservative Members will be laughing on the other side of their faces in a while. I hope that they will remember my words. When Hansard is printed it will contain those words to keep reminding them.
I said that I would be brief, and I have been. I do not use any gimmicks. I speak on behalf of the people whom I represent, as I see matters. I speak from the heart. I believe that I am a reasonable man. I am entitled to express my opinion. I believe that what is being said from the labour side of the Committee is fair, and I hope that many Conservative Members will seriously consider what we have said and support the amendment.

Mr. Peter Rees: The hon. Member for Ashfield (Mr. Haynes), who is new to the House and the Committee, has contributed to our debates both yesterday and today. I was not oppressed with quite the same sense of tragedy as seemed to envelop the hon. Gentleman's speech.
I turn with slightly more pleasure from the gloom with which the hon. Gentleman enveloped me, and perhaps other hon. Members, to the hon. Member for Swansea, East (Mr. Anderson), to whose blandishments I respond. He described me as an honest man, and compliments are hard to come by in this Committee. In addition, longer ago than either he or I care to recall, he was my Member of Parliament. He invited me to describe the Government's strategy. It may assist the Committee if I explain briefly, before turning to the amendments we are discussing, the strategy which led the Government to increase the hydrocarbon oil duties to the extent that they have done.
9.45 p.m.
It is plain to observe that there is an energy problem. The aim and the object of many civilised and industrial countries is to reduce their consumption by 5 per cent. We can debate legitimately how


that reduction is to be achieved. There are Labour Members who would willingly take on the whole apparatus of rationing. I have no doubt that this was in the mind of the hon. Member for Ashfield.

Mr. Haynes: That thought was not in my mind. I did not even mention it.

Mr. Rees: I am enormously reassured. If I attributed any views that the hon. Gentleman does not hold, he is right to correct me, even though it may not strictly be a point of order.

Mr. Dennis Canavan: It is a good point.

Mr. Rees: It may be a good point. I am delighted that the hon. Member for West Stirlingshire (Mr. Canavan) is joining our debate. He will perhaps also confirm that he has no desire to inflict on the long-suffering people of this country the whole apparatus of rationing. There is an alternative solution that may not commend itself to the hon. Gentleman and his friends. It is the interplay of market forces.

Mr. Russell Kerr: Rationing by the purse.

Mr. Rees: That evokes a predictable response from hon. Members on the Labour Benches. I have yet to hear a credible alternative, at least in this debate. There may be other opportunities.
The most notable contribution on this matter was that of the right hon. Member for Down, South (Mr. Powell). I am bound to say, although it is obviously a reflection on me rather than him, that I lost the thread of his argument at a certain stage. He seemed to be suggesting that the imposition of duties at this rate clogged, rather than eased, the play of market forces. The right hon. Gentleman asserted—he may be right—that these taxes are designed to suppress demand. Indeed, they are. What we hope to achieve, in effect, is to set the balance between supply and demand at a different point from that struck as recently as four months ago. This is surely a legitimate objective, although the right hon. Gentleman may be sceptical about the force that these tax increases will have.
If the right hon. Gentleman concedes at least that demand will be suppressed in a situation where there is a finite

supply of oil, this must surely be a legitimate objective and a legitimate means of achieving this objective.

Mr. J. Enoch Powell: Taking into account what the Minister says, his case appears to be that the market price, the supply and demand price, without the tax, would not bring about a reduction in the consumption of petrol and that the tax is the element that brings about the 5 percent. reduction. He now has to justify a 5 per cent. reduction if, in the open market, on market principles, the consumption would remain level at the market price.

Mr. Rees: I suspect that what lies between the right hon. Gentleman and myself is the time-scale over which market forces would operate without the interposition of this tax. I would assert that this tax may accelerate the process, which perhaps both the right hon. Gentleman and the Government would seek to achieve. I hope on that basis that the right hon. Gentleman will see that the tax is well conceived and that he will be able to give us his support at a later stage this evening.

Mr. Anderson: Is it not unrealistic to talk about market forces in this context, since many of the decisions are political rather than economic decisions by the producer countries, often on a capricious basis, and since a substantial part of consumption in this country—70 per cent. of consumption—is not relevant to the market anyway?

Mr. Rees: Political considerations may affect the OPEC producers. No doubt they do, and no doubt to a degree that is what affects the supply side of the equation. But the mere existence of political factors does not invalidate the proposition that this country faces the alternatives of rationing or at least the interplay of market forces. The point that I was taking up with the right hon. Member for Down, South is that he seemed to be suggesting—I may have misunderstood—that this tax would clog rather than ease the play of market forces. That is the only point that I was seeking to establish.
There is another objective which is legitimate for any Government—that is, to raise sufficient revenue for their needs. In a full year, these increases will yield


£525 million, and even in this year £400 million. Those sums are not lightly to be disregarded. Hon. Members who are tempted to vote against these increases are honour-bound to explain how they would replace them. We have been around this course before.

Mr. Stoddart: With you.

Mr. Rees: It has been my misfortune to intervene all too often—and perhaps the misfortune of the Committee too. I know how the battle lines are drawn. The hon. Member for Swindon (Mr. Stoddart) made a long and powerful speech and we know that he would favour leaving the levels of indirect taxation where they were when we took office. I would only say that that is one of the precise issues on which the electorate were invited to express their view. They have done so loudly and clearly and we have hearkened to what they said. It is up to the hon. Gentleman to adjust his thinking to that of the electorate.

Mr. Denzil Davies: rose—

Mr. Rees: Does the right hon. Gentleman wish to adjust his thinking also?

Mr. Denzil Davies: Did the Tory Party say during the election that it would put a tax on petrol to raise money to pay for cuts in direct taxation?

Mr. Rees: The right hon. Gentleman is not as naïve as he sometimes pretends. We said rather more loudly than his right hon. Friend the Member for Leeds, East (Mr. Healey) that there should be a shift from direct to indirect taxation. His right hon. Friend was saying the same thing but in muted tones, because he was not certain whether his right hon. and hon. Friends and the Labour Party associations would have exactly welcomed that proposal. However, because he had been presiding at No. 11 for a long time and because of his undoubted capacity—if I may say so without being patronising—he could see how the wind was blowing and he knew also that there had to be a shift.
Although the right hon. Member for Llanelli (Mr. Davies) chided me earlier for quoting that perceptive article by Mr. Peter Jenkins in The Guardian—

Mr. Denzil Davies: Do not bore us again.

Mr. Rees: I know that the right hon. Gentleman finds that article a little boring. It is always rather tiresome to have one's innermost thoughts read so clearly and candidly, by a friend—not by me.

Mr. Denzil Davies: It was withdrawn.

Mr. Rees: It may have been withdrawn—I know the subtle pressures and blandishments that the right hon. Gentleman can bring to bear—but let us not argue about the precise form of the Budget which the right hon. Member for Leeds, East would have introduced if he had been standing at this Box earlier this summer.
The right hon. Member for Llanelli knows—he was long enough in the Treasury—that to achieve a public sector borrowing requirement of £8½ billion, a Labour Government would have had to do something fairly drastic and they would have had to do it by means of indirect taxation. The only difference is that they would not have made the bold and imaginative cuts in direct taxation that the Chancellor has proposed. But we shall be able to come to that tomorrow, when the right hon. Gentleman will be able to give his no doubt highly informed view of how he would have constructed the Budget and where he would have put the weight of his tax impost.
Those are the two objectives, which I think are worthy and which I think deserve more widespread support than the Labour Party is at present disposed to give them.
I turn now to the way in which the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) moved the amendment.
The leader of the Liberal Party referred to the indexation of goods and services. With courtesy the right hon. Gentleman invited me to debate that issue. I do not wish to dodge that invitation. I shall be happy to debate it on another occasion, but the Committee has been sitting for two days and it would not be appropriate to range far on that matter at this stage. I emphasise that the proposals involve a measure of revalorisation back to 1977. The Liberal amendment


takes us back only to 1978. If anything, we have gone further than the Liberals propose.
The retail price index impact is 0·25 per cent. Opposition Members spoke wildly about these measures stoking the fires of inflation. I wish that in the dark days of 1976–77 inflation had been fuelled at only that rate.
The right hon. Member for Roxburgh, Selkirk and Peebles rode an old hobby horse—the idea of differential fuel duty. Of course that is attractive, but when one investigates the practicalities it does not stand close examination. For good or ill we live in a small archipelago and it is all too easy to cross regional boundaries to fill up our petrol tanks. The administrative difficulties would be considerable and the expense enormous. The administrative superstructure would not justify the results.

Mr. Penhaligon: The oil companies operated this system for a considerable time. The basic price of fuel in Scotland and other distant regions has always been at least 1p more than it is in London.

Mr. Rees: The hon. Member is talking about a differential that involves the cost of transportation. I am making a diffferent point. I appreciate the hon. Member's anxiety, since he represents a Cornish constituency, but his argument does not support the proposition advanced by his right hon. Friend the Member for Roxburgh, Selkirk and Peebles.
The hon. Member for Gateshead, West (Mr. Horam) discussed amendments that are designed to go over the ground that he was tilling thoroughly when he occupied a position on the Government Benches. Obviously he is still enamoured of a switch from vehicle excise duty to increased petrol duties.
At this hour of the night it is not appropriate to open up that debate. We have said that we shall deal with that matter. The hon. Member made a tentative step, which I do not think will commend itself to the Committee. We should let it rest.
Inevitably, the hon. Gentleman said that the increases would justify further wage claims. He disregards the cuts in direct taxation. We are entitled to pray in aid the strategy that the right hon.
Member for Leeds, East deployed in 1977. All that was offered was a tentative cut of 2 per cent., which eventually was shaded down to 1 per cent. The present Chancellor of the Exchequer has made a more generous offer to the country—if one talks about it in those terms which I do not. I hope that account will he taken of that.
The hon. Member for Gateshead, West then said that the increases justified the OPEC oil increases. All that we are doing is revalorising these duties back to 1977. There is no provocation or incentive to the OPEC countries to make what we are doing a pretext for further price increases.
The hon. Member made some fine points about price elasticity. If he is really worried I shall inflict an answer on the Committee. The available evidence suggests that a price increase of x per cent. leads to a fall in consumption of about 0·2x per cent. in the short term. In the long term, considering factors such as changes in the buying habits of car owners; the reduction is probably about 0–4x per cent. I leave the hon. Gentleman to digest and apply those figures.

It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Motion relating to Public Accounts and the Motion for an Instruction in the name of Mr. Michael English may be proceeded with, though opposed, until half-past Eleven o'clock or for one-and-a-half hours after the first Motion has been entered upon, whichever is the later.—[Mr. Cope.]

Orders of the Day — FINANCE BILL

Again considered in Committee.

Question again proposed, That the amendment be made.

Mr. Rees: I turn to the intervention of the hon. Member for Inverness (Mr. Johnston).

Mr. Alexander W. Lyon: I have been trying to do the sum posed by the Minister of State. On the basis of the information that he gave us, does it not mean that on a 10p increase per gallon the reduction in consumption will be minuscule? Does that not undermine some of the arguments for introducing a 10p increase?

Mr. Rees: I congratulate the hon. Gentleman, but I should prefer not to respond to his figures. I will look at it more carefully if he wishes and write to him about it. I would not trust my own mathematics or faculties at this hour of the night.
It was inevitable that someone in this debate would ask how a rather similar debate was conducted a little more than two years ago, on 4 April 1977, when the right hon. Member for Leeds, East proposed increases in petrol duty. Liberal Members evidently detect a faint inconsistency between the position of the Conservative Party now and then. Let me endeavour to reassure hon. Gentlemen, if I can, by reading a short passage from Hansard of 9 May 1977, quoting from a speech by my right hon. and learned Friend now the Chancellor of the Exchequer:
The Government have pre-eminently selected the wrong mix to bring before the House. We are not asking for motorists and petrol prices to be exempted altogether from the burden of indirect taxation. That would be to go back a long way. Nor do we ask that they should be exempt from the burden of taxation in a general switch from direct to indirect taxation. However the Government have brought forward a package in which motorists have been selected as the special victims of the switch. …"—[Official Report, 9 May 1977; Vol. 931, c. 990.]
Hon. Members will see at once, therefore, the basis on which we can distinguish what we propose today and what was proposed by the right hon. Member for Leeds, East on that occasion. I hope that that goes some way to reassure my hon. Friend the Member for New Forest (Mr. NcNairWilson), who has a long and honourable record of opposition to increases in petrol duties. He will realise that the situation is not precisely the same and perhaps he will be able to reconsider his position on this occasion, recognising that we have not singled out motorists for a swingeing impost. It is part of a calculated shift from direct to indirect taxation.
I am tempted, though I do not think that the Committee would bear with me, to recall what the right hon. Member for Leeds, East said on that occasion. I could have quoted him almost word for word and that would, I believe, have supported what we are attempting to do now.
The hon. Member for West Lothian (Mr. Dalyell), courteous as always, asked me another question. I am always staggered by the range of his interest and knowledge. On this occasion we move from the corruption of the stone facades of West Lothian to the distribution of oil. I hope that the hon. Member will not think me discourteous if I do not respond to the question, which falls more within the responsibilities of my right hon. Friend the Secretary of State for Energy. I do not think that I could do justice to the question, nor, if he will allow me to say so, is it directly relevant to the proposals that we are debating.

Mr. Dalyell: It was a question that was put by no fewer than four Members, on both sides of the House, during the debate. I repeat that it is of great urgency to those of us who represent country areas.

Mr. Rees: I entirely appreciate the motives that led the hon. Gentleman to put the question to me and led other hon. Members to raise it. I would only plead that my responsibilities are rather more limited. I am sure that my right hon. Friend will take note of the important points that have been made, and I do not doubt that the hon. Gentleman would prefer a more authoritative answer from my right hon. Friend to a perhaps not entirely considered response from somebody who has no particular responsibilities in that respect.
I return now to the amendments. The amendment moved for the Liberal Party by the right hon. Member for Roxburgh, Selkirk and Peebles is rather tentative. If Liberal Members are enamoured of the idea of indexation, I suggest that they should look with more favour on the Government's proposals, since they go a little further down that route than their amendment No. 7 does.
As for amendment No. 23 and new clause 10, spoken to so persuasively by the hon. Member for Gateshead, West, I


suggest that the hon. Gentleman is perhaps following the interest that he pursued when at the Department of Transport and that on this occasion what we propose will be of more advantage to the country. Of course, it does not rule out proper consideration of a diminution or phasing out of vehicle excise duty, but it will be more to the advantage of the country as a whole, and of motorists in particular, for the Committee to approve

the increases proposed by the Government instead of the rather tenuous proposals embodied in amendment No. 23 and new clause 10.
On that basis, I hope that the hon. Gentleman will not be disposed to press his amendment to a Division, recognising that there will be an opportunity to consider all these issues again when my right hon. Friend has completed his review of the vehicle excise duty.

Mr. Horam: First, on a procedural point, Mr. Crawshaw, I hope that it will be possible to have a separate vote on amendment No. 23 after we have voted on the Liberal amendment No. 7.
As for the general tenor of the Minister's remarks, I can only say that he has not answered the central case which we have advanced. The point of that case is that it is wrong to impose this gratuitous tax increase when world prices are moving up as quickly as they are at the moment. Irrespective of the Budget increase, we had an increse, in effect, of 35p in the price of four-star petrol in this country over the past six months. The Government have now imposed a further increase of 10p of their own accord.
The Government argue that they are doing that to cut back demand. Indeed, this was the point made by the Prime Minister in response to my right hon. Friend the Leader of the Opposition earlier this week. But our argument is that OPEC is already doing that job for them. Moreover, this point has been made not just from these Benches. It was made by the hon. Member for New Forest (Mr. McNair-Wilson) and by other hon. Members on the Government side. OPEC is doing the job without further help from the British Government.
The pretentious of this tax to be a conservation measure are bogus. It is simply a revenue-raising measure, and as such it is on all fours with the increase in VAT to 15 per cent. It is made necessary by the Government's commitment to cut income tax by 3p in the pound. That is the logic of their position and that is how it remains.
It is a harsh impost. It will hit the poor. As was said by many hon. Members on both sides, the business man will not be affected by the increase. The persons most affected will be those who have no alternative but to go by car to work. They will be the heaviest sufferers from an impost of this kind. Moreover, it will fuel inflation and it will steepen recession. And it will do all these things without even fitting into the Government's philosophy, because, as the right hon. Member for Down, South (Mr. Powell) pointed out, it is not even an application

of market forces; it is an interference with market forces.
I believe, therefore, that what the Government have done will begin to mobilise the men of this country against them, just as the VAT increases have mobilised the women. I am not surprised that this Government's political honeymoon has been the shortest in post-war history. The Minister of State has declined to reconsider his position on this tax, which many hon. Members on both sides have asked him to do, and we must therefore vote for amendment No. 23.

Mr. Richard Wainwright: There are many topics debated in the House of Commons that illustrate the dangers and sometimes the hollow futility of adversary politics, but no subject illustrates the dangers and futility more than debates on petrol duties. During the past 35 years, for example, the alternating parties in Government have increased petrol duties only to be hotly opposed by the alternating parties in Opposition. Each party has in turn used virtually the same arguments against the adversary party. Tonight is no exception. I do not accept for a moment the Minister of State's claim that his action in increasing petrol duties this year is wholly consistent with the Conservative Party's opposition to Labour's increase of petrol duties in 1977.
The Minister of State had the cheek to say that in 1977 the Conservative Party objected to the motorist being singled out for punishment. However, that is exactly what the Government have done this year. There was no increase proposed in the excise duties on alcohol or tobacco—merely a heavy increase in the excise duty on petrol. One of the many ways in which we could reduce the sham of adversary politics would be to make provision for automatic indexation of the specific excise duties that my right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) emphasised when introducing amendment No. 7.
The Minister of State, who has a reputation for impudence in this Chamber, made the extraordinary statement that the Government were making a meritorious revalorisation of the petrol duties. That is to sidestep the whole argument of automatic provision for indexation according to a strict formula.


The Government thought of a number, increased revenue and blamed revalorisation. That is a worthless argument. The Minister of State seeks to dress up the 10p increase as a revalorisation. The hon. and learned Gentleman thought of the number first and the excuse of re-valorisation subsequently.
The debate has been valuable in smoking out completely the false attribute claimed in the Budget Statement for this savage increase. It was claimed to be a meritorious, virtuous and pious weapon, designed to reduce consumption. I am sure that we are all indebted to the right hon. Member for Down, South (Mr. Powell) for effectively wiping out that argument. The right hon. Gentleman reduced the Minister to the feeble defence that perhaps market forces would reduce the consumption of petrol sufficiently, but at least this year's increase in duty would help to do it rather more quickly.
If that is the Government's defence of the 10p increase, it seems that the increase is merely an acceleration in the time scale of the reduction in demand. It follows logically that next year they will remove the temporary accelerator, as it will not be needed. According to the Government's gospel, market forces will have caught up, aided by the temporary boost that they claim skilfully to have introduced into the Budget. I hope that we can look forward confidently to the removal of the impost next year.
10.15 p.m.
As my right hon. Friend made clear, the amendment is based on the principle of automatic indexation. We argue that the additional revenue should be gained by the indexation of the specific excises on alcohol and tobacco. We tabled the amendment confident in the knowledge that the Treasury team, when in Opposition, was a group of fervent advocates of indexing the whole tax system. I do not wish to weary the Committee with more than one quotation, but regardless of the wishes of Conservative Members—I am sure that they know how embarrassing my quotation will be—they will get one.

On 25 July the hon. Member for Blaby (Mr. Lawson), who was one of the Shadow Treasury team, said:
I have time and again consistently stated that I am in favour of the same form of indexation being applied to specific duties. I have made no secret of it. If my hon. Friend will read the speech I made in the Budget debate, he will see that I dealt in specific terms with the"—
indexation of the—
petrol duty. If my hon. Friend will read the speeches of our right hon. and learned Friend the Member for Surrey, East (Sir G. Howe)
—the Shadow Chancellor—
he will see that for some time he has been making powerful speeches pointing out the evils of an unindexed tax system."—[Official Report, 25 July 1977; Vol. 936, c. 109.]
I was disappointed that exactly a week ago tonight in the debate on the Second Reading of the Finance Bill the Minister of State, although he could not deny his colleagues' enthusiasm for indexation, took refuge in an obscure sentence. He said:
Formal indexation would create technical difficulties, and perhaps we can deal with that subject in Committee."—[Official Report, 27 June 1979; Vol. 969, c. 577.]
I took the precaution of reminding the Minister of State of that by letter earlier this afternoon, yet tonight he refuses to return to the subject in Committee. He made an extraordinary excuse that we had spent a long time on this subject in Committee and that there was no time to go into the offer that he made a week ago. I hope that the Minister of State, on reflection, will feel that we are entitled to some amends for his extraordinary behaviour. The House and its procedures would benefit enormously from the automatic indexation of the various specific excise duties, just as it benefited enormously from the successful Rooker-Wise amendment for the automatic indexation of the personal allowances for income tax. The Liberal amendment proposes such an indexation. On those grounds, I commend it to the Committee.

Question put, That the amendment be made:—

The Committee divided: Ayes 37, Noes 295.

Division No. 43]
AYES
[10.18 p.m.


Allaun, Frank
Carter-Jones, Lewis
Evans, Ioan (Aberdare)


Alton, David
Clark, David (South Shields)
Forrester, John


Anderson, Donald
Conlan, Bernard
Grimond, Rt Hon J.


Bray, Dr Jeremy
Cryer, Bob
Heffer, Eric S.


Canavan, Dennis
Edwards, Robert (Wolv SE)
Howells, Geraint




Johnston, Russell (Inverness)
Newens, Stanley
Wainwright, Richard (Colne Valley)


Kilfedder, James A.
Prescott, John
Weetch, Ken


Kilroy-Silk, Robert
Robert, Gwilym (Cannock)
Wigley, Dafydd


Lambie, David
Ross, Ernest (Dundee West)
Wilson, Gordon (Dundee East)


Lamond, James
Ross, Stephen (Isle of Wight)



Lewis, Ron (Carlisle)
Skinner, Dennis
TELLERS FOR THE AYES:


Mckelvey, William
Stewart, Rt Hon Donald (W Isles)
Mr. A. J. Beith and


Miller, Dr M. S. (East Kilbride)
Thomas, Dafydd (Merioneth)
Mr. David Penhaligon.


Mitchell, R. C. (Soton, Itchen)
Torney, Tom





NOES


Adley, Robert
du Cann, Rt Hon Edward
Lamont, Norman


Aitken, Johathan
Dunn, Robert (Dartford)
Lang, Ian


Alexander, Richard
Durant, Tony
Langford-Holt, Sir John


Amery, Rt Hon Julian
Dykes, Hugh
Latham, Michael


Ancram, Michael
Eden, Rt Hon Sir John
Lawrence, Ivan


Arnold, Tom
Edwards, Rt Hon N. (Pembroke)
Lawson, Nigel


Aspinwall, Jack
Eggar, Timothy
Lee, John


Atkins, Rt Hon H. (Spelthorne)
Elliott, Sir William
Le Marchant, Spencer


Atkins, Robert (Preston North)
Emery, Peter
Lennox-Boyd, Hon Mark


Atkinson, David (B'mouth, East)
Eyre, Reginald
Lester, Jim (Beeston)


Baker, Kenneth (St. Marylebone)
Fairgrieve, Russell
Lewis, Kenneth (Rutland)


Baker, Nicholas (North Dorset)
Faith, Mrs Sheila
Lloyd, Ian (Havant &amp; Waterloo)


Banks, Robert
Fell, Anthony
Lloyd, Peter (Fareham)


Beaumont-Dark, Anthony
Fenner, Mrs Peggy
Loveridge, John


Bell, Ronald
Finsberg, Geoffrey
Luce, Richard


Bendall, Vivian
Fisher, Sir Nigel
Lyell, Nicholas


Bennett, Sir Frederic (Torbay)
Fletcher, Alexander (Edinburgh N)
McCrindle, Robert


Benyon, Thomas (Abingdon)
Fletcher-Cooke, Charles
Macfarlane, Neil


Benyon, W. (Buckingham)
Fookes, Miss Janet
MacGregor, John


Berry, Hon Anthony
Forman, Nigel
MacKay, John (Argyll)


Best, Keith
Fowler, Rt Hon Norman
Macmillan, Rt Hon M. (Farnham)


Bevan, David Gilroy
Fox, Marcus
McNair-Wilson, Michael (Newbury)


Biffen, Rt Hon John
Fraser, Peter (South Angus)
McNair-Wilson, Patrick (New Forest)


Biggs-Davison, John
Fry, Peter
McQuarrie, Albert


Blackburn, John
Galbraith, Hon T. G. D.
Madel, David


Blaker, Peter
Gardiner, George (Reigate)
Major, John


Body, Richard
Gardner, Edward (South Fylde)
Marland, Paul


Bonsor, Sir Nicholas
Gilmour, Rt Hon Sir Ian
Marlow, Tony


Bottomley, Peter (Woolwich West)
Glyn, Dr Alan
Marshall, Michael (Arundel)


Bowden, Andrew
Goodhart, Philip
Marten, Neil (Banbury)


Boyson, Dr Rhodes
Goodlad, Alastair
Mates, Michael


Bright, Graham
Gorst, John
Mather, Carol


Brinton, Tim
Gower, Sir Raymond
Maude, Rt Hon Angus


Brittan, Leon
Grant, Anthony (Harrow C)
Mawby, Ray


Brocklebank-Fowler, Christopher
Gray, Hamish
Mawhinney, Dr Brian


Brooker, Hon Peter
Grieve, Percy
Maxwell-Hyslop, Robin


Brotherton, Michael
Griffiths, Eldon (Bury St Edmunds)
Mayhew, Patrick


Brown, Michael (Brigg &amp; Sc'thorpe)
Griffiths, Peter (Portsmouth N)
Mellor, David


Browne, John (Winchester)
Grist, Ian
Meyer, Sir Anthony


Bruce-Gardyne, John
Grylls, Michael
Miller, Hal (Bromsgrove &amp; Redditch)


Bryan, Sir Paul
Gummer, John Selwyn
Mills, Peter (West Devon)


Buchanan-Smith, Hon Alick
Hamilton, Hon Archie (Eps'm&amp;Ew'll)
Miscampbell, Norman


Buck, Antony
Hamilton, Michael (Salisbury)
Mitchell, David (Basingstoke)


Budgen, Nick
Hampson, Dr Keith
Monro, Hector


Bulmer, Esmond
Hannam, John
Montgomery, Fergus


Burden, F. A.
Haselhurst, Alan
Moore, John


Butcher, John
Havers, Rt Hon Sir Michael
Morgan, Geraint


Butler, Hon Adam
Hawksley, Warren
Morris, Michael (Northampton, Sth)


Cadbury, Jocelyn
Heddle, John
Morrison, Hon Charles (Devizes)


Carlisle, John (Luton West)
Henderson, Barry
Morrison, Hon Peter (City of Chester)


Carlisle, Kenneth (Lincoln)
Hicks, Robert
Mudd, David


Carlisle, Rt Hon Mark (Runcorn)
Hingins, Rt Hon Terence L.
Murphy, Christopher


Chalker, Mrs. Lynda
Hill, James
Myles, David


Channon, Paul
Hogg, Hon Douglas (Grantham)
Neale, Gerrard


Chapman, Sydney
Holland, Philip (Carlton)
Neubert, Michael


Churchill, W. S.
Hooson, Tom
Newton, Tony


Clark, Hon Alan (Plymouth, Sutton)
Hordern, Peter
Normanton, Tom


Clark, Dr William (Craydon South)
Howe, Rt Hon Sir Geoffrey
Nott, Rt Hon John


Clarke, Kenneth (Rushcliffe)
Howell, Ralph (North Norfolk)
Oppenheim, Rt Hon Mrs Sally


Cockeram, Eric
Hunt, David (Wirral)
Osborn, John


Colvin, Michael
Hunt, John (Ravensbourne)
Page, John (Harrow, West)


Cormack, Patrick
Irving, Charles (Cheltenham)
Page, Rt Hon R. Graham (Crosby)


Corrie, John
Jenkin, Rt Hon Patrick
Parkinson, Cecil


Costain, A. P.
Jessel, Toby
Parris, Matthew


Cranborne, Viscount
Johnson Smith, Geoffrey
Patten, Christopher (Bath)


Critchey, Julian
Jopling, Rt Hon Michael
Patten, John (Oxford)


Crouch, David
Joseph, Rt Hon Sir Keith
Pattie, Geoffrey


Dean, Paul (North Somerset)
Kaberry, Sir Donald
Pawsey, James


Dickens, Geoffrey
Kellett-Bowman, Mrs Elaine
Percival, Sir Ian


Dodsworth, Geoffrey
Kimball, Marcus
Pollock, Alexander


Dorrell, Stephen
King, Rt Hon Tom
Porter, George


Douglas-Hamilton, Lord James
Kitson, Sir Timothy
Price, David (Eastleigh)


Dover, Denshore
Knox, David
Proctor, K. Harvey







Pym, Rt Hon Francis
Speed, Keith
Viggers, Peter


Raison, Timothy
Speller, Tony
Waddington, David


Rathbone, Tim
Spicer, Jim (West Dorset)
Wakeham, John


Rees, Peter (Dover and Deal)
Spicer, Michael (S Worcestershire)
Waldegrave, Hon William


Rees-Davies, W. R.
Sproat, Iain
Walker-Smith, Rt Hon Sir Derek


Renton, Tim
Squire, Robin
Wall, Patrick


Rhodes James, Robert
Stainton, Keith
Waller, Gary


Rhys Williams, Sir Brandon
Stanbrook, Ivor
Walters, Dennis


Ridley, Hon Nicholas
Stanley, John
Ward, John


Ridsdale, Julian
Steen, Anthony
Watson, John


Rifkind, Malcolm
Stevens, Martin
Wells, John (Maidstone)


Roberts, Michael (Cardiff NW)
Stewart, Ian (Hitchin)
Wells, Bowen (Hert'rd &amp; Stev'nage)


Roberts, Wyn (Conway)
Stewart, John (East Renfrewshire)
Wheeler, John


Rossi, Hugh
Stokes, John
Whitney, Raymond


Rost, Peter
Stradling Thomas, J.
Wickenden, Keith


Royle, Sir Anthony
Taylor, Robert (Croydon NW)
Wiggin, Jerry


Sainsbury, Hon Timothy
Tebbit, Norman
Wilkinson, John


St. John-Stevas, Rt Hon Normar
Temple-Morris, Peter
Williams, Delwyn (Montgomery)


Scott, Nicholas
Thomas, Rt Hon Peter (Hendon S)
Winterton, Nicholas


Shaw, Michael (Scarborough)
Thompson, Donald
Wolfson, Mark


Shelton, William (Streatham)
Thorne, Neil (Ilford South)
Young, Sir George (Acton)


Shepherd, Colin (Hereford)
Thornton, Malcolm
Younger, Rt Hon George


Shepherd, Richard (Aldridge-Br'hills)
Townend, John (Bridlington)



Shersby, Michael
Townsend, Cyril D. (Bexleyheath)
TELLERS FOR THE NOES:


Silvester, Fred
Trippier, David
Mr. John Cope and


Skeet, T. H. H.
Trotter, Neville
Mr. Robert Boscawen


Smith, Dudley (War. and Leam'ton)
Vaughan, Dr Gerard

Question accordingly negatived.

Amendment proposed: No. 23, in page 2, line 31, leave out '£0·0810' and insert '£0·0735'.—[Mr. Horam.]

Question put, That the amendment be made:—

The Committee divided: Ayes 251, Noes 299.

Division No.44]
AYES
[10.30 p.m.


Abse, Leo
Davidson, Arthur
Hamilton, W. W. (Central Fife)


Adams, Allen
Davies, Rt Hon Denzil (Llanelli)
Hardy, Peter


Allaun, Frank
Davies, E. Hudson (Caerphilly)
Harrison, Rt Hon Walter


Alton, David
Davies, Ifor (Gower)
Hart, Rt Hon Dame Judith


Anderson, Donald
Davis, Clinton (Hackney Central)
Hattersley, Rt Hon Roy


Archer, Rt Hon Peter
Davis, Terry (B'rm'ham, Stechford)
Haynes, Frank


Armstrong, Rt Hon Ernest
Deakins, Eric
Healey, Rt Hon Denis


Ashton, Joe
Dean, Joseph (Leeds West)
Heffer, Eric S.


Atkinson, Norman (H'gey, Tott'ham)
Dempsey, James
Hogg, Norman (E Dunbartonshire)


Bagier, Gordon A. T.
Dixon, Donald
Home Robertson, John


Barnett, Guy (Greenwich)
Dobson, Frank
Homewood, William


Barnett, Rt Hon Joel (Heywood)
Dormand, Jack
Hooley, Frank


Beith, A. J.
Douglas, Dick
Horam, John


Benn, Rt Hon Anthony Wedgwood
Dubs, Alfred
Howell, Rt Hon Denis (B'ham, Sm'H)


Bennett, Andrew (Stockport N)
Duffy, A. E. P.
Howells, Geraint


Bidwell. Sydney
Dunlop, John
Huckfield, Les


Booth, Rt Hon Albert
Dunnett, Jack
Hughes, Mark (Durham)


Boothroyd, Miss Betty
Dunwoody, Mrs Gwyneth
Hughes, Robert (Aberdeen North)


Bottomley, Rt Hon Arthur (M'brough)
Eastham, Ken
Hughes, Roy (Newport)


Bradley, Tom
Edwards, Robert (Wolv SE)
Janner, Hon Greville


Bray, Dr Jeremy
Ellis, Raymond (NE Derbyshire)
Jay, Rt Hon Douglas


Brown, Hugh D. (Provan)
Ellis, Tom (Wrexham)
John, Brynmor


Brown, Ronald W. (Hackney S)
Ennals, Rt Hon David
Johnson, James (Hull West)


Buchan, Norman
Evans, Ioan (Aberdare)
Johnston, Russell (Inverness)


Callaghan, Rt Hon J. (Cardiff SE)
Evans, John (Newton)
Jones, Rt Hon Alec (Rhondda)


Callaghan, Jim (Middleton &amp; P)
Ewing, Harry
Jones, Barry (East Flint)


Campbell, Ian
Field, Frank
Jones, Dan (Burnley)


Campbell-Savours, Dale
Fitch, Alan
Kaufman, Rt Hon Gerald


Canavan, Dennis
Flannery, Martin
Kerr, Russell


Cant, R. B.
Fletcher, Ted (Darlington)
Kilfedder, James A.


Carmichael, Neil
Foot, Rt Hon Michael
Kilroy-Silk, Robert


Carter-Jones, Lewis
Ford, Ben
Kinnock, Neil


Cartwright, John
Forrester, John
Lambie, David


Clark, David (South Shields)
Foster, Derek
Lamborn, Harry


Cocks, Rt Hon Michael (Bristol S)
Foulkes, George
Lamond, James


Cohen, Stanley
Fraser, John (Lambeth, Norwood)
Leadbitter, Ted


Coleman, Donald
Freeson, Rt Hon Reginald
Leighton, Ronald


Concannon, Rt Hon J. D.
Garrett, John (Norwich S)
Lestor, Miss Joan (Eton &amp; Slough)


Conlan, Bernard
Garrett, W. E. (Wallsend)
Lewis, Ron (Carlisle)


Cook, Robin F.
George, Bruce
Lofthouse, Geoffrey


Cowans, Harry
Gilbert, Rt Hon Dr John
Lyon, Alexander (York)


Craigen, J. M. (Glasgow, Maryhill)
Ginsburg, David
Lyons, Edward (Bradford West)


Crowther, J. S.
Golding, John
McCartney, Hugh


Cryer, Bob
Gourlay, Harry
McDonald, Dr Oonagh


Cunliffe, Lawrence
Graham, Ted
McElhone, Frank


Cunningham, George (Islington S)
Grant, John (Islington C)
McGuire, Michael (Ince)


Cunningham, Dr John (Whitehaven)
Grimond, Rt Hon J.
McKay, Allen (Penistone)


Dalyell, Tam
Hamilton, James (Bothwell)
McKelvey, William




MacKenzie, Rt Hon Gregor
Parry, Robert
Stott, Roger


Maclennan, Robert
Penhaligon, David
Summerskill, Hon Dr Shirley


McMahon, Andrew
Powell, Rt Hon J. Enoch (S Down)
Taylor, Mrs Ann (Bolton West)


McMillan, Tom (Glasgow, Central)
Powell, Raymond (Ogmore)
Thomas, Dafydd (Merioneth)


McNally, Thomas
Prescott, John
Thomas, Jeffrey (Abertillery)


McWilliam, John
Price, Christopher (Lewisham West)
Thomas, Mike (Newcastle East)


Magee, Bryan
Race, Reg
Thomas, Dr Roger (Carmarthen)


Marks, Kenneth
Radice, Giles
Thorne, Stan (Preston South)


Marshall, David (Gl'sgow, Shettles'n)
Richardson, Miss Jo
Tilley, John


Marshall, Dr Edmund (Goole)
Roberts, Ernest (Hackney North)
Torney, Tom


Marshall, Jim (Leicester South)
Roberts, Gwilym (Cannock)
U-win, Rt Hon Tom


Martin, Michael (Gl'gow. Springb'rn)
Robertson, George
Varley, Rt Hon Eric G.


Maxton, John
Rodgers, Rt Hon William
Wainwright, Richard (Colne Valley)


Maynard, Miss Joan
Rooker, J. W.
Walker, Rt Hon Harold (Doncaster)


Meacher, Michael
Ross, Ernest (Dundee West)
Watkins, David


Mellish, Rt Hon Robert
Ross, Stephen (Isle of Wight)
Weetch, Ken


Mikardo, Ian
Ross, Wm. (Londonderry)
Wellbeloved, James


Millan, Rt Hon Bruce
Rowlands, Ted
Welsh, Michael


Miller, Dr M. S. (East Kilbride)
Ryman, John
White, Frank R. (Bury &amp; Radcliffe)


Mitchell, Austin (Grimsby)
Sandelson, Neville
Whitehead, Phillip


Mitchell, R. C. (Soton, Itchen)
Sever, John
Whitlock, William


Molyneaux, James
Sheerman, Barry
Wigley, Dafyd


Morris, Rt Hon Alfred (Wythenshawe)
Sheldon, Rt Hon Robert (A'ton-u-L)
Willey, Rt Hon Frederick


Morris, Rt Hon Charles (Openshaw)
Shore, Rt Hon Peter (Step and Pop)
Williams, Rt Hon Alan (Swansea W)


Morris, Rt Hon John (Aberavon)
Silkin, Rt Hon John (Deptford)
Williams, Sir Thomas (Warrington)


Moyle, Rt Hon Roland
Silkin, Rt Hon S. C. (Dulwich)
Wilson, Gordon (Dundee East)


Mulley, Rt Hon Frederick
Silverman, Julius
Wilson, Rt Hon Sir Harold (Huyton)


Newens, Stanley
Skinner, Dennis
Wilson, William (Coventry SE)


Oakes, Rt Hon Gordon
Smith, Rt Hon J. (North Lanarkshire)
Winnick, David


Ogden Eric
Snape, Peter
Woolmer, Kenneth


O'Halloran, Michael
Soley, Clive
Wrigglesworth, Ian


O'Neill, Martin
Spearing, Nigel
Wright, Sheila


Orme, Rt Hon Stanley
Spriggs, Leslie
Young, David (Bolton East)


Owen, Rt Hon Dr David
Stallard, A. W.



Palmer, Arthur
Steel, Rt Hon David
TELLERS FOR THE AYES:


Park, George
Stewart, Rt Hon Donald (W Isles)
Mr. George Morton and


Parker, John
Stoddart, David
Mr. Thomas Cox




NOES


Adley, Robert
Burden, F. A.
Fletcher, Alexander (Edinburgh N)


Aitken, Jonathan
Butcher, John
Fletcher-Cooke, Charles


Alexander, Richard
Butler, Hon Adam
Fookes, Miss Janet


Amery, Rt Hon Julian
Cadbury, Jocelyn
Forman, Nigel


Ancram, Michael
Carlisle, John (Luton West)
Fowler, Rt Hon Norman


Arnold, Tom
Carlisle, Kenneth (Lincoln)
Fox, Marcus


Aspinwall, Jack
Carlisle, Rt Hon Mark (Runcorn)
Fraser, Peter (South Angus)


Atkins, Rt Hon H. (Spelthorne)
Chalker, Mrs. Lynda
Fry, Peter


Atkins, Robert (Preston North)
Channon, Paul
Galbraith, Hon T. G. D.


Atkinson, David (B'mouth, East)
Chapman, Sydney
Gardiner, George (Reigate)


Baker, Kenneth (St. Marylebone)
Churchill, W. S.
Gardner, Edward (South Fylde)


Baker, Nicholas (North Dorset)
Clark, Hon Alan (Plymouth, Sutton)
Gilmour, Rt Hon Sir Ian


Banks, Robert
Clark, Dr William (Croydon South)
Glyn, Dr Alan


Beaumont-Dark, Anthony
Clarke, Kenneth (Rushcliffe)
Goodhart, Philip


Bell, Ronald
Clegg, Walter
Goodlad, Alastair


Bendell, Vivian
Cockeram, Eric
Gorst, John


Bennett, Sir Frederic (Torbay)
Colvin, Michael
Gow, Ian


Benyon, Thomas (Abingdon)
Cormack, Patrick
Gower, Sir Raymond


Benyon, W. (Buckingham)
Corrie, John
Grant, Anthony (Harrow C)


Berry, Hon Anthony
Costain, A. P.
Gray, Hamish


Best, Keith
Cranborne, Viscount
Grieve, Percy


Bevan, David Gilroy
Critchley, Julian
Griffiths, Eldon (Bury St Edmunds)


Biffen, Rt Hon John
Crouch, David
Griffiths, Peter (Portsmouth N)


Biggs-Davison, John
Dean, Paul (North Somerset)
Grist, Ian


Blackburn, John
Dickens, Geoffrey
Grylls, Michael


Blaker, Peter
Dodsworth, Geoffrey
Gummer, John Selwyn


Body, Richard
Dorrell, Stephen
Hamilton, Hon Archie (Eps'm&amp;Ew'll)


Bonsor, Sir Nicholas
Douglas-Hamilton, Lord James
Hamilton, Michael (Salisbury)


Bottomley, Peter (Woolwich West)
Dover, Denshore
Hampson, Dr Keith


Bowden, Andrew
du Cann, Rt Hon Edward
Hannam, John


Boyson, Dr Rhodes
Dunn, Robert (Dartford)
Haselhurst, Alan


Bright, Graham
Durant, Tony
Havers, Rt Hon Sir Michael


Brinton, Tim
Dykes, Hugh
Hawksley, Warren


Brittan, Leon
Eden, Rt Hon Sir John
Hayhoe, Barney


Brocklebank-Fowler, Christopher
Edwards, Rt Hon N. (Pembroke)
Heddle, John


Brooke, Hon Peter
Egger, Timothy
Henderson, Barry


Brotherton, Michael
Elliott, Sir William
Hicks, Robert


Brown, Michael (Brigg &amp; Sc'thorpe)
Emery, Peter
Higgins, Rt Hon Terence L.


Browne, John (Winchester)
Eyre, Reginald
Hill, James


Bruce-Gardyne, John
Fairgrieve, Russell
Hogg, Hon Douglas (Grantham)


Bryan, Sir Paul
Faith, Mrs Sheila
Holland, Philip (Carlton)


Buchanan-Smith, Hon Alick
Fell, Anthony
Hooson, Tom


Buck, Antony
Fenner, Mrs Peggy
Hordern, Peter


Budgen, Nick
Finsberg, Geoffrey
Howe, Rt Hon Sir Geoffrey


Bulmer, Esmond
Fisher, Sir Nigel
Howell, Ralph (North Norfolk)







Hunt, David (Wirral)
Mitchell, David (Basingstoke)
Skeet, T. H. H.


Hunt, John (Ravensbourne)
Monro, Hector
Smith, Dudley (War. and Leam'ton)


Jenkin, Rt Hon Patrick
Montgomery, Fergus
Speed, Keith


Jessel, Toby
Moore, John
Speller, Tony


Johnson Smith, Geoffrey
Morgan, Geraint
Spicer, Jim (West Dorset)


Jopling, Rt Hon Michael
Morris, Michael (Northampton, Sth)
Spicer, Michael (S Worcestershire)


Joseph, Rt Hon Sir Keith
Morrison, Hon Charles (Devizes)
Sproat, Iain


Kaberry, Sir Donald
Morrison, Hon Peter (City of Chester)
Squire, Robin


Kellett-Bowman, Mrs Elaine
Mudd, David
Stainton, Keith


Kimball, Marcus
Murphy, Christopher
Stanbrook, Ivor


King, Rt Hon Tom
Myles, David
Stanley, John


Kitson, Sir Timothy
Neale, Gerrard
Steen, Anthony


Knox, David
Neubert, Michael
Stevens, Martin


Lamont, Norman
Newton, Tony
Stewart, Ian (Hitchin)


Lang, Ian
Normanton, Tom
Stewart, John (East Renfrewshire)


Langford-Holt, Sir John
Nott, Rt Hon John
Stokes, John


Latham, Michael
Oppenheim, Rt Hon Mrs Sally
Stradling Thomas, J.


Lawrence, Ivan
Osborn, John
Taylor, Robert (Croydon NW)


Lawson, Nigel
Page, John (Harrow, West)
Tebbit, Norman


Lee, John
Page, Rt Hon R. Graham (Crosby)
Temple-Morris, Peter


Le Merchant, Spencer
Parkinson, Cecil
Thatcher, Rt Hon Mrs Margaret


Lennox-Boyd, Hon Mark
Parris, Matthew
Thomas, Rt Hon Peter (Hendon S)


Lester, Jim (Beeston)
Patten, Christopher (Bath)
Thompson, Donald


Lewis, Kenneth (Rutland)
Patten, John (Oxford)
Thorne, Neil (Ilford South)


Lloyd, fan (Havant &amp; Waterloo)
Pattie, Geoffrey
Thornton, Malcolm


Lloyd, Peter (Fareham)
Pawsey, James
Townend, John (Bridlington)


Loveridge, John
Percival, Sir Ian
Townsend, Cyril D. (Bexleyheath)


Luce, Richard
Pollock, Alexander
Trippier, David


Lyell, Nicholas
Porter, George
Trotter Neville


McCrindle, Robert
Price, David (Eastleigh)
Vaughan, Dr Gerard


Macfarlane, Neil
Proctor, K. Harvey
Viggers, Peter


MacGregor, John
Pym, Rt Hon Francis
Waddington, David


MacKay, John (Argyll)
Raison, Timothy
Wakeham, John


Macmillan, Rt Hon M. (Farnham)
Rathbone, Tim
Waldegrave, Hon William


McNair-Wilson, Michael (Newbury)
Rees, Peter (Dover and Deal)
Walker-Smith, Rt Hon Sir Derek


McNair-Wilson, Patrick (New Forest)
Rees-Davies, W. R.
Wall, Patrick


McOuarrie, Albert
Renton, Tim
Waller, Gary


Madel, David
Rhodes James, Robert
Walters, Dennis


Major, John
Rhys Williams, Sir Brandon
Ward, John


Marland, Paul
Ridley, Hon Nicholas
Watson, John


Marlow, Tony
Ridsdale, Julian
Wells, John (Maidstone)


Marshall, Michael (Arundel)
Rifkind, Malcolm
Wells, Bowen (Hert'rd &amp; Stev'nage)


Marten, Neil (Banbury)
Roberts, Michael (Cardiff NW)
Wheeler, John


Mates, Michael
Roberts, Wyn (Conway)
Whitney, Raymond


Mather, Carol
Rossi, Hugh
Wickenden, Keith


Maude, Rt Hon Angus
Rost, Peter
Wiggin, Jerry


Mawby, Ray
Royle, Sir Anthony
Wilkinson, John


Mawhinney, Dr Brian
Sainsbury, Hon Timothy
Williams, Delwyn (Montgomery)


Maxwell-Hyslop, Robin
St. John-Stevas, Rt Hon Normam
Winterton, Nicholas


Mayhew, Patrick
Scott, Nicholas
Wolfson, Mark


Mellor, David
Shaw, Michael (Scarborough)
Young, Sir George (Acton)


Meyer, Sir Anthony
Shelton, William (Streatham)
Younger, Rt Hon George


Miller, Hal (Bromsgrove &amp; Redditch)
Shepherd, Colin (Hereford)



Mills, Iain (Meriden)
Shepherd, Richard (Aldridge-Br'bills)
TELLERS FOR THE NOES:


Mills, Peter (West Devon)
Shersby, Michael
Mr. Robert Boscawen and


Miscampbell, Norman
Silvester, Fred
Mr. John Cope.

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Mr. Charles R. Morris: I seek elucidation from the Minister of State about the impact that the clause may have on domestic users of oil for central heating purposes. Those with oil-burning central heating systems may have been encouraged when the Chancellor of the Exchequer said in his Budget Statement:
I am not, however, increasing the duty for burning oil and for domestic paraffin, which is the oil used most commonly in the home, particularly by pensioners."—[Official Report, 12 June 1979; Vol. 968, c. 254.]
However, in the brief issued by the Treasury, that undertaking was interpreted to mean, in terms of clause 2, that

the exception for the increase in duty is that kerosenes that include domestic paraffin and over two-thirds of oil that is normally used for domestic central heating are exempt.
Does it follow that one-third will bear the impost envisaged by the tax changes? Will the Minister indicate the burden that will be imposed on householders who have domestic oil-fired central heating systems? It should be borne in mind that those luckless householders have carried a burden of continuing increases in the cost of oil for domestic central heating over the past 12 or 18 months.
10.45 p.m.
A report in today's edition of The Sun indicates that these families might not he in a position to receive any such


fuel during the forthcoming winter. It refers to warnings issued by Britain's oil distributors who have told the Minister of State, Department of Energy that shortages in paraffin and heating oil are more critical than the squeeze on petrol. Those householders could be affected if my interpretation of clause 2 is correct. Therefore, I should be grateful if the Minister could clear up that matter.
Will oil for central heating purposes be increased as a result of the clause? I hope that the Minister will bear in mind that many householders are obliged to use oil because they live in geographically isolated areas where other forms of heating are not immediately available.

Mr. Peter Rees: I shall respond briefly to the right hon. Gentleman's comments. The clause increases the duty on heavy oil that is not used as road fuel and furnace fuel that is used by approved persons from 0·55p per litre, or 2·5p per gallon, to 0·66p per litre, or 3p per gallon. The increase in kerosene applies only to aviation turbine fuel. The duty on other kerosene remains at 0·22p per litre, or 1p per gallon. I cannot be more specific, because various sorts of heating use various sorts of fuel. I hope that that answers with sufficient particularity the hon. Gentleman's point.

Mr. Charles R. Morris: The Minister's statement will not have encouraged householders with oil-fired central heating. I am not concerned for the affluent, but I am concerned for the lower-income householders who have already borne an increasing financial burden.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

To report Progress and ask leave to sit again.—[Mr. Biffen.]

Committee report Progress; to sit again tomorrow.

Orders of the Day — PUBLIC ACCOUNTS

Ordered,

That Mr. Joel Barnett, Mr. A. P. Costain, Mr. Terry Davis, Mr. Dick Douglas, Mr. W. W. Hamilton, Mr. Peter Hordern, Mr. Barry Jones, Sir Timothy Kitson, Mr. James Lamond, Mr. Nigel Lawson, Mr. Michael Morris, Mr. Arthur

Palmer, Mr. Michael Shaw and Mr. Robert Taylor be members of the Committee of Public Accounts.

Ordered,

That the members of the Committee of Public Accounts nominated this day shall continue to be members of that Committee for the remainder of this Parliament.

Ordered,

That this Order be a Standing Order of the House.—[Lord James Douglas-Hamilton.]

Orders of the Day — INTERNATIONAL YEAR OF THE CHILD

Motion made, and Question proposed, That this House do now adjourn.—[Lord James Douglas-Hamilton.]

10.50 p.m.

Miss Betty Boothroyd: If he looks at the declaration of the rights of the child, will the Minister find, as I do, that it is hard to see which, if any, of its principles will be implemented? I can think of few greater impediments to their fulfilment than the growth in population. It is probably the greatest impediment of all.
Demographers throughout the world have produced terrifying figures indicating that the world's population will grow at the rate of nearly 2 million children each week over the next 20 years. That means an additional 100 million children each year, all with the basic needs for food, clothing, shelter, pure water and health care. It is a daunting prospect. Equally daunting is the fact that the majority of that growth takes place in the less developed countries, where already about 80 per cent. of the world's children live, and where poverty exists in its various forms.
Incredible as it may seem, about 1,200 million children cannot read or write, and for millions there are no schools. Such children grow up knowing no freedom from want. Words such as "progress", "democracy" and "achievement" are meaningless to them. Unless we can improve their status we shall deny them the fundamental right to become useful members of society, and they will be unable to develop their individual abilities.
Ignorance brings poverty, too. Although malnutrition and disease are child killers, according to social indicators 300 million children today are kept alive by the


barest minimum of food, and their bodies and minds become stunted, as they exist in a state of hunger from birth until they die. Their rights are nullified, because children starving to death have no rights under any international code of conduct.
A most revealing statement was made two weeks ago in a broadcast from Calcutta, when a nun in the Mother Teresa clinic there said:
Many women in Calcutta throw away their children or kill them at birth because they are not wanted.
The interviewer could not believe it. He asked her three times, and three times the nun repeated the same statement. No one who has seen Calcutta can fail to acknowledge that the sight of poverty there not only shocks the mind but invades the heart.
In many countries the infant mortality rate is far too high. The reality behind the cold figures is that in a family of five one child dies before it can reach its first birthday. High mortality encourages larger families, because parents who expect children to die have more children as an insurance policy against their own old age.
If we want the programme for the International Year of the Child to succeed. spasmodic relief, valuable as it is in some instances, is not the answer. It is like taking a sleeping pill. We have to find long-term remedies that take the population factor into account as well as the need that exists for family planning activities. It has to mean more than contraception. Fertility regulation programmes become effective only when life expectation and living standards have also risen. The first need is to relieve poverty and to create a social framework conducive to fertility regulation.
One of the long-term remedies lies in assistance for the provision of primary health services to aid the reduction in infant mortality rates, to go further in assisting preventive health care, family planning work and the reduction in the loss of young lives from diseases that are curable if only they are tackled.
About a year ago, I had the opportunity to see at first hand work going on in a health centre in a rural area of India. A good deal of the money had been made

available from United Kingdom sources. I visited a sub-centre, where the health worker had prepared a short report on the use of vaccine in preventive medicine. His report said:
The vaccine is kept at the health centre in a refrigerator and is carried to the sub-centre in a thermos flask by a man 20 kilometres along a pucca road,
Neither you nor I, Mr. Deputy Speaker, would acknowledge that it is a pukka road. The report added:
A refrigerator is not available at the sub-centre and afterwards he carries the quantity back in a thermos flask and returns the unused vials. In case there is immediate need, it is brought quickly by a horse conveyance. At times, the subcentre cannot return unused vaccine in vials. Then a pitcher is kept in a wooden case surrounded by sand. The pitcher's mouth is covered by a gauze piece. The sand is soaked with water and all is kept in a dark place.
I quote this report to show that with little opportunity, there is initiative and a real desire to do a job in preventive medicine. The sub-centre is responsible for the health of 94,000 people. There are two health workers, who have had three months' training. To have a doctor is beyond their wildest dreams. Their attainable aim is one trained worker per thousand of the population. The eradication of diseases that are curable, the spreading of knowledge and the avoidance of disease make it possible for those children who are born to be planned for, to be wanted and to be cared for. That is surely the object of the United Nations declaration.
Programmes need to be encouraged to assist the urban and the rural poor to increase their productivity and their income. Over the past few years the World Bank has initiated programmes which confirm that development projects have doubled the income, particularly of rural families. The experience shows that appropriate technology, which makes plentiful use of the surplus labour available, and economic use of scarce capital provide increased family income. This leads to an improved standard of living for families and for children. By reducing poverty, the attendant fertility is also reduced, which is another objective.
The key factor in providing the child's basic needs lies in improving the status of women, particularly in the less developed parts of the world.
Two-thirds of the world's 800 million illiterates are women. Where they are isolated in their families, where they lack opportunities, where they are blocked by illiteracy from involvement in and contact with a larger society, their means of fulfilling their own lives are so narrow that childbearing stands out as the only alternative they have.
But there is evidence that where women participate in programmes aimed at expanding their basic education, increasing their knowledge and instruction about child care and nutrition, and where they have access to knowledge and family planning techniques, they have fewer children and the children that they have are healthier and live longer, and receive improved care throughout their childhood.
It is obvious that malnourished and illiterate mothers give birth to weak and unhealthy infants. Greater resources are needed to enhance the status of women in a variety of ways. Other Governments should be encouraged to introduce legislation about marriage and women's rights to ensure that better prospects exist for today's children in this International Year of the Child—for they are tomorrow's parents.
The United Nations estimates that about $500 million a year, from all sources, private and governmental, is spent on population activities throughout the world. Would the Minister make many people happy by agreeing that it would be a good idea for the Government to take a lead in urging the international community to aim at a target of, let us say. $1 billion over the next five years so that the United Nations can have a cohesive programme of population activities, thereby implementing the point in the declaration of the rights of the child-It would be splendid if, in the International Year of the Child, the Government could give that lead.
Can the Minister confirm my information that in 1977 £5- ½ million of aid by this country was spent on population activities, which is the equivalent of only 1 per cent. of our total aid budget? I believe that the survey for 1978 is not yet completed, but it seems that about £8 million or £9 million was devoted last year to this programme. If so, that is a grati-

fying and sizeable increase and I hope it will continue.
I seek an assurance that aid for population activities will not be reduced. I go further, and ask for a firm indication that the finance to be made available over the next few years will be increased. It would be tragic at this time if we did not acknowledge that the condition and future of the world's children is inseparably linked with the peace and prosperity of tomorrow's world, and if, particularly now that we are halfway through the International Year of the Child, we did not show by our deeds, rather than by words alone, our intention of reaching the objectives in that declaration.

11.5 p.m.

The Minister of State, Foreign and Commonwealth Office (Mr. Neil Marten): I congratulate the hon. Member for West Bromwich, West (Miss Boothroyd) on having secured the Adjournment debate and on having chosen this subject, which I know, from past experience, is very dear to her heart. She, like me, has travelled, thanks sometimes to the Commonwealth Parliamentary Association, on our delegations to overseas countries. We have seen what she so graphically described tonight.
The hon. Lady asked about our financial support. Our contribution to be made for 1979 –80 to the International Planned Parenthood Federation is £2 million. For the United Nations fund for population activities we shall give another £2 million. Our direct expenditure for 1979 –80 under the aid programme on population activities will be about £10 million. I cannot be more precise, because that subject covers a wide area.
The hon. Lady referred quite rightly to the fact that health is one of the most important factors in the future of a child. Perhaps I may outline the sort of work that we in the Department are supporting. We support several World Health Organisation special programmes, including the expanded programme of immunisation and the diarrhoeal diseases programme. We contributed £1 million to that in 1978, and I am glad to say that the United Kingdom was the largest contributor to the programme.
We also supported the International Centre for Diarrhoeal Diseases Research in Bangladesh and its outstations in that


country. Its programme now includes all acute diarrhoeal diseases and research into the relationships between them, malnutrition and overpopulation, which was the point made by the hon. Lady. We hope to increase our contribution in the future.
We have given substantial aid to malaria control programmes—for example, in the Solomon Islands. Malaria is a notorious killer of young children. We propose to participate in the Sudan primary health care programme in South Darfur province, which will concentrate on mother and child health care. We are co-operating with the World Bank in a £4·32 million mother and child, health and family planning project in Egypt. We support a number of joint research links between the United Kingdom institutions and their counterparts in developing countries. There are one or two more, but I shall not weary the hon. Lady by going through the whole list. I think that I have shown that we are doing quite a lot on the health side.
The Adjournment debate is specifically about the Year of the Child. Perhaps before coming on to that I can answer the hon. Lady's points about population matters in a broader context. We share her concern about population growth and the strain that a rapidly growing population imposes upon the development of nations. That is one of the reasons behind the existence of the population bureau in this Administration, which is directly concerned with these matters and which had provided the advisory service that led to the spending of about £9 million on population activities in 1978.
I am happy to inform the House that I am considering, with my advisers, the family welfare project in India, and this is in addition to our other activities on the subject of population overseas. We are keeping a very close eye on the pattern of demographic trends. While these are still disquieting, we note that the dramatic acceleration in population growth which started around the middle of this century has been slowing down in some parts of the developing world.
There is some hope that the population explosion can be contained, but it is a hope only. I see that the hon. Member

for West Bromwich, West shakes her head at that.
The slow improvement in the overall figures cannot blind us to the terrible discrepancies in life expectancy, birth rate and infant mortality in the world. In 1975 the birth rate in the poorest countries was almost three times as high as that in the industrialised world. That illustrates what the hon. Lady said. The death rate at birth was even more shocking. In the poorest of the developing countries it was over eight times the rate for the richer parts of the world. That surely is a challenge for population and aid policy.
The population problem is an integral part of development. That is why it is given high priority in the aid programme. It is a complex problem, which must be approached in many different ways. For the Overseas Development Administration the chief lines of approach are measures to reduce infant and child mortality, with attention to nutrition, the provision of family planning information and services as an integral part of the maternal and child health care services. Sometimes there are clashes with religions. The obstacles do not always involve finance.
In addition we are involved in the provision of improved welfare services and increased research into the cultural background of communities to identify the most effective means of offering family planning services and improving the status of women. That has a great part to play.
I remind the House that the emphasis on activities under the International Year of the Child is with the national programmes for the children of one's own country. This is why, in a similar debate on 7 February this year in the House of Lords, Lord Wells-Pestell laid particular stress on the activities of the Government Departments in the United Kingdom concerned with the IYC which are fundamentally directed towards the needs of children within the United Kingdom.
In line with traditional United Kingdom practice it is also correct that much of the responsibility for activities within the United Kingdom should rest with the voluntary agencies, which, under the general guidance of the United Kingdom Association for IYC are mounting an effective programme.
As was made clear in the earlier debate to which I referred, this is by no means the whole story. We are of course concerned with the needs of children overseas, both as part of our general aid policy and as part of our more specific concentration on those people in greatest need in the poorest of the developing countries.
Children are frequently amongst the most disadvantaged members of the community in the developing world and are consequently themselves much in the forefront of our current aid policy.
We obviously support the aims and intentions of the IYC. However, we do not necessarily see the problems of children overseas as specifically and distinctively separate from the problems of the developing world as a whole. For this reason we particularly welcome the third of the aims of the IYC as defined by UNICEF—to promote recognition of the vital links between programmes for children on the one hand and economic and social progress on the other.
The essence is that this is one development process in which all disadvantaged people share—perhaps children more than most. But the aid policy must comprise all those at greatest risk.
Within this general concentration on aid to the poorest I should also point to specific areas of direct relevance to children which are of great importance to our aid programme. They are, first, the medical services, including primary health care, mother and child care and family planning; secondly, nutrition and food production; thirdly, education; fourthly, aid to multilateral agencies such as UNICEF, UNESCO, the World Health Organisation and so on, all of them concerned with the needs of children and, fifthly, aid to non-Government organisations active in assisting children.
I must say also that we were pleased to see that emphasis has been laid on national and local action programmes which are likely to be of particular value in developing countries and which will, we hope, lead to a concentration of expenditure on activities on the ground. This practical approach is very much in line with our own assessment of the needs of the poorest people in the poorest countries.
This concentration on the practical aspects of the International Year of The Child is at the back of our continuing support for UNICEF, which is most concerned with the provision of basic services to the poorer sectors of the communities of developing countries, including assistance to maternal and child health.
This concern must be seen in the light of the very high infant mortality rate, the low life expectancy, the lack of health facilities and the absence of safer water supplies, which are characteristic of the poorest countries of the world.
There is perhaps some indication of our support for this very practical policy in the fact that in recent years our support to UNICEF has been increasing steadily, almost doubling in the past two years, with the hon. Lady's party in Government, and now standing at £5·8 million. In addition to this, we are contributing about £1·6 million to UNICEF "noted" projects, which are projects identified by UNICEF but for which regular programme funds are not available.

Mr. Frank McElhone: Having heard the Minister's comments about child welfare and particularly about infant mortality, may I ask him whether this programme, carried on from the previous Administration, will be affected by the £50 million cuts announced by the Chancellor in his Budget Statement.

Mr. Marten: At the moment the £50 million cuts are being examined. I cannot give a specific answer to the question, but I would feel that the programme probably will not be affected. I would not like to be committed to that, because the examination of the cuts is not yet finalised, but I will let the hon. Gentleman know, of course, if it is affected. I hope that it will not be.
The "noted" projects cover such very basic requirements as vitamin A capsules, drugs and diet supplementation kits, drugs for mother and child care clinics, assistance with school roofing and water supplies—all very practical features.
I think that our support for the International Year of the Child is demonstrated more by our general support for UNICEF and its activities and by the general orientation of our aid programme


than by any very specific measures directed towards the Year as a whole.
I would like to make clear that we do not envisage the Year as an end in itself, in any way, but rather as an essential boost towards an ongoing programme of support for disadvantaged members of the community in the poorest parts of the world, among whom children are very prominent indeed. This is not to say, however, that there are no initiatives at all directed towards the Year.
I can point in particular to three significant developments directly related to the International Year of the Child overseas. We have contributed £150,000 over a three-year period towards the cost of the international secretariat set up by UNICEF in New York to handle the arrangements for the Year. Secondly, we have contributed £40,000 towards the cost of a conference in London organised by the Institute of Child Health. An additional £115,000 is now to be made available to implement further ideas which came forward at the conference.
Thirdly, we have offered to consider—I underline those words—meeting half the cost of suitable projects in developing countries put forward by the United Kingdom Association for the International Year of the Child. In 1978–79 my Department contributed £319,000 towards community health projects, including £211,000 specifically for mother

and child health. Examples of projects include three mother and child health programmes in rural Nepal, mobile medical units in Orissa, India, Kenya and Tanzania, public health education in North-East Brazil, Zaire, and for nomads in Kordofan, Sudan, and sanitation programmes in Bangladesh and Sudan.
Support has been provided chiefly through OXFAM, the Save The Children Fund and Christian Aid, to all of which I pay tribute for the work they do.
To sum up, therefore, our response to the IYC has been threefold. Our support under our normal aid programme for the poorest people in the poorest countries will continue. We are already within the aid programme dealing specifically with areas of direct relevance to the needs of mother and child.
We have already taken a number of specific initiatives directed towards the needs of the IYC for administrative and practical purposes, but we regard these initiatives as a part of our general commitment to poor people within the aid programme rather than as an end in themselves. They are part of a commitment which will not end with the completion of this particular year, important though that year is.

Question put and agreed to.

Adjourned accordingly at twenty minutes past Eleven o'clock.